April gas traded down to the upper boundary of a zone of support between $2.775 (April’s February low) and $2.922 (where there are multiple daily lows) before rallying and failing again at another lower high ($3.270 v $3.317). Volume and open interest fell as the prompt declined . For the last two weeks the change in open interest has been technically negative. During the past week with April lower from Thursday – Thursday (open interest statistics always lag one day) the total number of contracts outstanding fell 68,613 Since open interest peaked on 02/02 (along with volume) at 1,710,172 contracts 193,844 have been liquidated. The daily closing price difference of prompt gas on 02/02 and 03/19 is $.135/dt. That seems to suggest that the gas market is absorbing substantial liquidation without a corresponding price decline. A year ago, total open interest reached a low of 1,465,145 during April just before the Q2 ’25 rally kicked off.
While the nearby contracts ended the week modestly weaker (April through November lost between $.007 and $.064). November the strongest, May and June the weakest, distant deferred gas showed considerable sponsorship. The Q1 ’27 months gained an average of $.128. Weakness in nearby contracts while distant deferred contracts gain is characteristic of “bear” spreading (the simultaneous purchase of one, sale of the other) suggesting the expectation of profiting from lower prices. “Bear” spreading works when the nearby contracts falling faster than the deferred contracts. if large participants were anticipating rising prices or a lengthy trading range, premiums awarded to deferred contracts would be expected to diminish relative to the nearby.
