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Natural Gas Futures Fluctuate on Conflicting Technical Signals

Natural gas futures fluctuated in New York as traders tried to interpret conflicting technical price signals.

Gas moved in a range of 11.4 cents as intraday prices rose above the 50-, 100- and 200-day moving averages, indicating the market may rise. Meanwhile, futures have failed to climb above the bottom of an “expanding wedge” price pattern, suggesting the market may decline, analysts with Kase & Company Inc. in Albuquerque, New Mexico, said in a note to clients.

“The market has come a very long way in a very short amount of time, and we might get a bit of a pullback,” said Stephen Schork, president of the Schork Group Inc. energy advisory company in Villanova, Pennsylvania. “For now, though, this market looks like it still has legs.”

Natural gas for April delivery fell 0.7 cent to settle at $4.161 per million British thermal units on the New York Mercantile Exchange. Futures have dropped 5.5 percent this year.

Last week, gas prices rose to the highest in six weeks amid speculation that the loss of nuclear power generation in Japan after the country’s worst earthquake on record would reduce liquefied natural-gas imports to the U.S.

Gas prices advancing above the key moving averages is “an automatic buy signal,” said Mike Fitzpatrick, a partner with the Kilduff Group in New York.

Expanding Wedge

Gas futures were in a “bearish expanding wedge” from Oct. 25 through early February, the Kase analysts said. During that time, gas prices followed a pattern of rising, falling and then climbing beyond the previous rally’s high. Since March 18, futures have tested the bottom of the wedge but failed to remain above it, indicating prices may fall, Kase said.

“Prices don’t belong up here,” said Mike Rose, the director of energy trading at Angus Jackson Inc. in Fort Lauderdale, Florida. “The fleeting moments of winter that we have left aren’t enough to burn much gas.”

MDA Federal Inc.’s EarthSat Energy Weather forecast mostly normal temperatures for the continental U.S. from March 31 through April 4. The low temperature in New York on March 31 may be 47 degrees Fahrenheit (8 Celsius), 8 above normal, according to AccuWeather Inc. in State College, Pennsylvania. The low in Chicago may be 41 degrees, 6 above normal.

About 52 percent of U.S. households use natural gas for heating, according to the Energy Department.

Gas inventories have been rising relative to the five-year average since Feb. 18. Stockpiles may end the winter heating season on March 31 at 1.549 trillion cubic feet, according to the Energy Department.

Gas futures volume in electronic trading on the Nymex was 272,967 as of 2:45 p.m., compared with the three-month average of 300,000. Volume was 322,738 on March 18. Open interest was 908,572 contracts. The three-month average open interest is 873,000.

The exchange has a one-business-day delay in reporting open interest and full volume data.

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