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April Natural Gas Expected to Rally Before Decline Resumes

|Includes:The United States Natural Gas ETF, LP (UNG), USO, UUP

In 15 of the past 19 years, the April natural gas NYMEX contract has expired at a price level that is higher than March.  Since March expired at $4.816 per MMBtu, the ability for April 2010 to collapse prior to expiration is limited.  Rather, it is more than likely that the April contract is going to create a "scare" and rally a bit higher, maybe even testing the $5 per MMBtu level.  But, in reality, the nation is entering a shoulder month, where there is limited demand for natural gas for heating and virtually no demand yet for electric generation, and so any rally isn't expected to be sustainable.  Eventually, the decline is expected to resume and a move to the technical first quarter low is anticipated by the end of April, which will have a greater impact on the May 2010 natural gas NYMEX contract.  The million-dollar question is how to define that decline

Stocks: UNG, USO, UUP