The April natural gas contract shook off long-range warm trends and an increase in estimated production over the weekend that led prices to gap down last evening, as the contract eventually settled up two ticks from Friday. 

(Click on image to enlarge)

It was the May contract the led the way higher, however, as it dragged up both April and summer gas. 

(Click on image to enlarge)

The result was another tick lower in the April/May contract spread that is set to expire on Wednesday. 

(Click on image to enlarge)

Prices initially dipped on indications that production had surged back near record levels over the weekend. We also noted looser balances over the past month, and a dip in LNG exports hit prices last week as well. 

(Click on image to enlarge)

Through the day gas prices found some support on medium-range weather forecasts that continued to trend colder, verifying our Neutral sentiment in our Morning Update as well. 

Henry Hub cash prices saw some firmness through the morning with modest cold expected tomorrow, though they were not particularly strong. 

(Click on image to enlarge)

Attention now turns to April contract options expiry tomorrow, which last month brought quite a bit of volatility and a violent move upwards.