After trading within a tight, 20-cent range for almost theentire month of March, natural gas futures finally broke throughstubborn resistance just before the closing bell yesterday in alocal and fund led rally. Advancing 7.8 cents to finish at $2.914,the April contract narrowly edged out the 7.6 gain achieved by theMay contract. Estimated volume was moderate with 74,886 contractschanging hands.

Despite the markets lack of sustained direction the past fewweeks, most traders were not surprised by the move. Cash has beensupportive, almost to the point of inviting the futures market tobreak resistance, a Gulf Coast trader offered. “I think cash pricesmoving higher last Friday despite warming temperatures and lowerweekend demand was the last straw.”

By that same token, traders will watch the cash market thismorning to look for confirmation of yesterday’s advance. Gulf Coastphysical prices for today’s flow was flat or slightly higheryesterday morning before the futures run-up.

Tim Evans of New York-based Pegasus Econometric Group, describedyesterday’s move to highs not witnessed since last November asalmost entirely technical. “There’s not a lot of fundamentaljustification for prices over a dollar more than a year ago. Latewinter heating demand has been almost non-existent and storage isonly marginally less than year-ago levels. It will take an awfullot in the way of electricity demand and hurricanes this summer torationalize these prices.”

Looking ahead to Wednesday’s storage report, Evans doesn’texpect that fundamental situation to change very much. “I amlooking for a net withdrawal of 20-40 Bcf to fall pretty much inline with last year’s 37 Bcf number.”

Now that the April contract has topped resistance at $2.90, itwill face further resistance at the psychological $3.00 barrier.Additional resistance is seen at prior highs from the continuationchart at $3.13. In last night’s Access trading, the April contracthad already moved closer to those levels, posting a 3.6 cent gainto $2.950 by 6:00 p.m. (CDT) after hitting a high of $2.963.

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