Led by local buying, the natural gas futures market made twodistinctive thrusts higher Friday, as traders set their sights onresistance at $2.90. However it was not to be and after the secondsurge was thwarted shortly after noon (CST), the market tumbledlower amid light profit taking and position squaring. Oddly, theprompt month April suffered the smallest declines of any contract,slipping 1.1 cents to finish the week at $2.836. By comparison, theMay contract slipped 1.4 cents lower and the 12-month strip gaveback 1.5 cents. Estimated volume was moderate, with 69,063contracts changing hands.

Although the futures finished the day with a slight downturn, aHouston risk manager felt that on a weekly basis the market waspositive. “We failed to put in a higher high on the weekly chart,but at least we settled the week higher,” he said. Despite thricetesting lows in the $2.71-74 area, the April contract managed a5.1-cent advance on the weekly chart.

Looking ahead, traders are squarely focused on the last threedays prior to the Wednesday expiration of the April contract. Formany, the big question is whether April will remain inside the$2.70-90 movement that has limited the contract’s movement sinceMarch 1. If the futures market is to break above stubbornresistance at $2.90, it will need the support of cash prices. Andjudging by Friday’s 7-cent advance in Henry Hub cash values in theface of moderating weekend demand, it appears that the cash marketis up to the task.

Also of interest this week is the one-hour period following therelease of fresh storage data Wednesday, which will also be thelast hour of trading for the April contract. Prior to March 1, theAmerican Gas Association released storage data every Wednesday atabout 4:00 p.m. (EST) — too late to impact that day’s futuresmarket. Now, in just the first month in which the AGA agreed tomove the report forward (by two hours), the expiration falls on aWednesday and thus could be impacted by the report. And if thetrading on the first three Wednesdays is any indication (spikinghigher late in the session March 1 and March 15, while trendinglower March 8), the market could be in for some expiration-daypyrotechnics.

“Another 62 Bcf withdrawal would not surprise me,” said Tom Saalof Miami-based Pioneer Futures, estimating this week’s withdrawalreport could fall in line with the 62 Bcf seen last week. However,the aforementioned risk manager favors a withdrawal more comparableto that experienced this time last year when just 37 Bcf was pulledfrom the ground. Warm weather and an urgency to get a head start onthe upcoming injection season has caused some Northeast storageoperators to begin resting or idling their storage fields, he said.”The sooner you stop withdrawing, the sooner you can startinjecting.”

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