Trading on Wednesday looked much like it did Tuesday as April natural gas once again ping-ponged between resistance and support. Bolstered by a record day in crude futures, the natural gas prompt month was unable to get below the $7.06 low on the session, despite multiple attempts. April ended up settling at $7.192, up 1.3 cents.

Natural gas was once again supported by its big brother as April crude notched an all-time high of $56.60/bbl before settling at $56.46/bbl, another first, and a $1.41 gain on the day.

However, some market experts believe that natural gas is reserving judgment on the crude price explosion. “The natural gas market is not making too much of the surge to new highs in petroleum markets today, preferring to hang back and wait for Thursday’s DOE storage report before making the next move,” said IFR Energy Services’ Tim Evans. “April natural gas is idling comfortably near unchanged and doesn’t look to be working quite as hard as it did on Tuesday, when demand was over the 100K mark.”

Evans said prices are holding within easy reach of the $7.26 high as the market’s retest of the $7.25 peak from Nov. 24. “On the downside, the minor break of Tuesday’s $7.07 low was inconsequential, with more support at the $6.89 high from last week.”

Evans said he thinks the natural gas storage report for the week ended March 11 will reveal a 90-110 Bcf estimate, although the consensus seems to be closer to the top end of that range. He added that there is a bit more cold to go yet, so the market can anticipate another supportive report or two before spring-like weather takes hold.

Citigroup’s Kyle Cooper is looking for a withdrawal between 94 and 104 Bcf. He noted that a report in this range would be considered slightly bullish on a temperature-adjusted basis.

Thursday’s natural gas storage report will go up against last year’s 43 Bcf pull and the 64 Bcf five-year average withdrawal.

While the focus right now is on crude, Advest Inc.’s Jay Levine said, “Don’t underestimate natural gas. While I sense we’re getting ever closer to the top in crude and the products, the same can’t be said here. This market has been itching to move higher and this past Monday it did, highlighting that storage mostly likely is taking a back seat (to rising oil prices).”

A top analyst noted that funds and managed accounts holding short positions are still in the hot seat. “The stubbornly large net short position (futures only) on the part of the funds is a key bullish influence. Tuesday’s new market high will likely force a sharp reduction in the funds net short holdings of 14,000 lots as of a week ago,” says Jim Ritterbusch of Ritterbusch and Associates. He noted that although current levels of short holdings are well below January’s extreme short position of more than 55,000 contracts, “The net short holdings are excessive given the much improved chart picture and petroleum strength.”

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