Natural gas markets are bouncing this week after several technical indicators flashed support, including a third week of speculators cutting net short positioning.

“April has established near-term technical support in the $1.64 area here in recent days, and with slow stochastics approaching overbought territory, that should offer an additional layer of support as well,” said NGI’s Pat Rau, director of Strategy & Research.

NGI’s Henry Hub spot price traded at almost a 30% discount to the April New York Mercantile Exchange (Nymex) contract last week, falling to a 25-year low of $1.240/MMBtu. On Friday, that gap to the Nymex prompt-month contract closed to 17%, still at a historically high level, according to Rau.

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