Natural gas futures have rallied 10% since the beginning of November, but several indicators suggest a more bearish outlook for the months ahead.

February-April 2014 futures are backwardated, with the April contract trading $0.032 cheaper than the February contract, despite the high storage costs associated with natural gas. Note that the rest of the curve, from April forward, is mostly in contango. Additionally, risk reversals are trading at new lows for the year, according to data from Deutsche Bank, with options skew failing to tilt bullish even as prices rose. And the level of natural gas option implied volatility is fairly low - in about the 25th percentile versus two years of observations.

Seasonal studies show that the first few months of the year are typically bearish for NG returns. If those seasonal trends play out, more supply comes online in the new year, and the curve steepens into contango, this time spread will stand to profit:

Trades: Sell February NG futures at $3.849 and buy April NG futures at $3.815.

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Those prices will likely be different when you see this, but the key thing is that we're looking at a difference of $0.030, or more.

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At the time of publication, Jared Woodard held positions in NG.