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Why the top could finally be in for nat gas

Cold weather keeps nat gas hot

Natural gas has had a phenomenal run over the past five weeks, rising nearly 25 percent on the strength of colder weather forecasts. But as the commodity slips in early Wednesday trading, the huge rally could finally be coming to an end.

"Right now we have seen just frigid temperatures," said Jeff Kilburg of KKM Financial. "How long can that persist? We have seen a dramatic 'up' move here, and right now I want to be a seller and kind of capture this euphoria in the market."

Because natural gas is used for heating, cold weather and cold forecasts are a boon to nat gas. So the recent spate of frigid weather has lit a fire under the commodity.

(Read more: Think more frigid weather is ahead? Then buy this)

"NYMEX gas continued to rally as nothing has changed," wrote Stephen Schork, the energy expert who edits the widely followed Schork Report. "That is to say, prices continued to rise as temps continued to fall."

But on Wednesday, nat gas is staging only its third drop in 16 sessions. And Jim Iuorio of TJM Institutional Services says this is past due.

"I definitely think it's due for a pullback," Iuorio said Tuesday on CNBC's "Futures Now." "I'm with Jeff—I think it gets lower now. After all, it can't get much colder here."

Trading the weather

On the other side of the trade, Anthony Grisanti of GRZ Energy is staying bullish.

"I'm buying pullbacks here," he said. "I do believe there is more room to the upside, and the potential to hit $4.50 with a significant cold spell seems like a real possibility."

Given that nat gas is currently trading at about $4.20, that would represent a 7 percent rally from current levels, taking the commodity to a 2½-year high.

(Read more: New cold war: Russia eyes chilly Arctic in global energy play)

At this point, Grisanti will closely watch Thursday's natural gas inventory report, provided by the Energy Information Administration. But Iuorio says he won't even bother.

"There was a moment today when I was going to start diving into the supply of natural gas, and then I remembered, who cares?" Iuorio said. "It's all about the weather forecasts, and it's all about the perception of demand."

—By CNBC's Alex Rosenberg. Follow him on Twitter: @CNBCAlex.

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