Buoyed by a supportive short-term weather outlook and another impressive advance in the nearby crude oil market, natural gas futures surged Monday on a combination of speculative short-covering and commercial trader buying.
Prices were stronger in the overnight Access trading session, setting the stage for a gap higher open Monday. When a midday sell-off could not fill in the gap, the buyers bid the market higher in an afternoon buying surge.
Traders polled by NGI were quick to point to the nearly 4% gain in crude oil prices as a supportive for natural gas Monday. In addition to the heightened fear of terrorism following the train bombings in Madrid last week, crude oil prices received a boost from market banter suggesting OPEC was considering raising its $22-28 price target. April crude advanced $1.25 to close at $37.44 Monday — its highest settlement for a prompt crude contract in more than a year.
Also of impact, sources agreed, were revised forecasts suggesting winter would make at least one more curtain call in the Northeast. After warming to the 50s and 60s (degrees) Monday, temperatures across the region were expected to drop back into the 30s for highs on Tuesday. Meanwhile, forecasters were tracking the formation of a coastal storm forming off the coast of North Carolina that is expected to dump as much as a foot of snow on its path from Washington DC north through Philadelphia, New York, Connecticut and Boston. Cash prices in the Northeast responded as one might expect, advancing 20 or more cents in anticipation of Old Man Winter’s return.
And while a half foot of snow in New York City may have a psychological impact on the futures traders who will have to trudge through it on their way to the NYMEX, it only delays the inevitable realization that winter is over. According to the latest six- to 10-day forecast released Monday by the National Weather Service, above-normal temperatures are expected across a wide swath of the country for the March 21-25 timeframe.
In daily technicals, April futures have support in conjunction with the aforementioned chart gap at the nexus of Friday’s $5.65 high and Monday’s $5.66 low. On the upside, selling is seen just above Monday’s high at rising channel resistance at the $5.80 level.
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