For the third day in a row the April Futures contract tested butwas unable to break through the $2.185 resistance level, stoppingshort at $2.172 Wednesday. April opened higher in sympathy withHenry Hub cash market prices, which eked out a couple-cent gain onthe day, but it was limited to a 4-cent trading range with arelatively light 31,462 contracts changing hands.
A Houston broker looks for continued range-bound trading in theshort-term. However, the top of his range focuses on a ceiling inthe $2.22 area. With a move above that, a “breakout could beconfirmed,” he said. “What at first seemed like a minor speed bumpcould very well turn out to be an Acme brick wall.”
Another analyst is looking for a continuation of the currentdowntrend upon the return of more seasonal temperatures. She looksfor a downside objective in the $2.025-075 range for April.However, she is keeping her eye on the Summer-Winter spread. “Thatspread is about 35 cents. So, the question becomes if and when theinjection season will cause that spread to narrow? People willstart to buy the Summer months and sell the Winter months to hedgetheir storage positions. Depending on how soon that occurs, Aprilcould receive a boost to stay in line with the summer months.”
She may have a cause for concern because for the second week ina row the producing region has seen a net injection of gas intostorage. With a 14 Bcf injection last week and a 1 Bcf injectionthis week (please see AGA storage chart page 3) the injectionseason is off to its fastest start ever. Net withdrawals across theentire U.S. were estimated at 54 Bcf for the period ending March6th. This figure comes in slightly stronger than last week’s 47 Bcffigure and the 51 Bcf worth of withdrawal this week last year.
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