The April 13 natural gas contract has been moving sideways across the top of its range for a week now. Earlier today, the contract edged up to $4.00 which is a strong psychological point of resistance, inspiring profit taking on long positions. The exodus from the contract drove the price back down to $3.94, but April 13 nattie is climbing again at the moment.
Winter's long tail has limited downside action for the contract in the last few weeks and with USDA projecting continued cold for another week, nattie isn't likely to fall. Meanwhile, drawdowns reported by EIA were 10 bcf below projections at 62 bcf limiting upside upside potential as well. But U.S. natural gas stockpiles are 21% below year-ago and just 9.5% above the bottom end of the five-year average.
A major cold snap or late season severe weather could drive more aggressive withdrawals and lend fuel to a high side swing. That aside, look for April natural gas to teeter at the top of its range for the time being, but if April nattie can muster a run above $4.00, the trend suggests it could stay there until the mercury climbs.