For the second trading session in a row Monday the Aprilcontract opened at 2.81, but in contrast to the price fallexperienced last Friday, prices spiked higher at the open yesterdayand quickly tested life-of-contract highs. However, severalattempts to punch through the $2.88 level failed and that left themarket with an 8.6 cent advance and a $2.86 closing price.

While Monday’s price action was certainly constructive, it leftmany traders asking the question: “where do we go from here?”Natural gas caught a ride from oil futures [Monday], a Northeasttrader said. “We have set up a nice little trading range from themid-$2.70s to the upper $2.80s. I am not sure the market is readyto break out to the upside quite yet.”

In the short-run, Cynthia Kase of New Mexico-based Kase andCompany agrees, pointing to strong resistance above the market inthe prompt months as well as the 12-month strip. For Kase, the12-month strip is the largest impediment to further gains. “The12-month strip could, in a sustained bull market, as defined by atleast three major bull runs of three or four months each,ultimately climb to $3.30. Yet it is unlikely this will happenright now without any major corrective phase and re-alignment ofthe forward curve preceding such an event.

“Watch the shape of the forward curve for clues as to when thiscorrection will start. In the near term, April should hold $2.57once a major, but intermediate scale correction takes place.”

With the correction completed, she looks for another push to theupside, with the prompt month closing over $3.34 and the 12-monthstrip holding nominally $3.10 before a more major downsidecorrection sets in.

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