The March Nymex contract turned in another heavily tradedsession on Tuesday, but once again, volatility was virtuallynon-existent. Although the spot month managed a 3.7 cent gain to$2.216, the contract was held to a relatively tight 5.5 centtrading band. Not even the expiration of options yesterday couldpersuade traders to push March out of its recent rigid tradinglimits.

According to one trader, “since March hasn’t shown much lifeyesterday and today, it probably ain’t going to do it (Wednesday),when it goes off the board.” As such, he expects more attention toshift to the April contract, which he feels may be in store for atest to the upside. Although temperatures are expected to be warmerthan normal for the remainder of the month – the CNG Energy Indexpredicts energy usage across the United States will be between 19%and 32% below normal – the trader noted cash prices are inchinghigher. “When futures move up, and basis moves right along with it,that tells you something. The Chicago basis (for March) has flooredat +5, and bases in the (midcontinent) producing regions aretightening. The cash market obviously accepts the fact that pricescan move higher, which is a necessary step for higher futureprices, especially once March leaves the board,” he explained.

April has some longer term support as well, so argued ananalyst. “The long term technical charts look well oversold, with$2.15 looking like a strong support level. Plus, whereas I don’tthink you’ll see as many marketers go into March as short as theywere for February, they won’t be overly long, either. That meansany spike in demand will most likely be met with spot purchases, orat least with storage withdrawals. Either should be good forprices,” he said.

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