After piercing key resistance at $2.78 shortly before noon(EST), natural gas futures kicked into overdrive yesterday astraders discounted warm weather forecasts and added to their longpositions.

By notching a $2.835 high Wednesday, the prompt month April hasmade new life-of contract highs in each of its first three days asthe spot Nymex contract. The contract finished up 5.4 cents at$2.815. However, April was not the only month reaching new highs.Breaking a record set back in August of last year, the 12-monthstrip also rumbled to a new all-time high at $2.916 yesterday.

As usually is the case for most traders, the compelling feature wasnot the actual price level but rather how the market got there. Whileit is not unusual to have the market rally in the morning then godormant before rallying again near the close, yesterday traders hadspecial circumstances to explain their behavior. As announced lastmonth (See Daily GPI, Feb. 7), theAmerican Gas Association moved the release of its weekly storagereport to the new time of 2 to 2:15 p.m. (EST) from between 4 and 4:45p.m. Although the report, which featured a 74 Bcf withdrawal, wasthought to be a tad on the bearish side, it did not deter traders fromtaking the April contract higher at the close.

“It was famine then feast,” said a Houston-based trader of thenear illiquid trading conditions that preceded the heavy buyingonce the report was released. “It didn’t matter what sort of number[the AGA released]. The bull was out of the chute.”

Another source agreed, adding a majority of the buying wasprobably done by traders who sold off some of their length prior tothe report. “The real test will be whether the market can getthrough $2.83-835 area, which corresponds to the top of Bollingerband resistance,” she said. Bollinger bands are typically used bytraders to predict overbought/oversold zones, to determine thedivergences between price and indicators and to project pricetargets. April’s Bollinger top yesterday was $2.833.

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