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Little Weather Seen to Impede Stout Storage Builds; May Called Unchanged

May natural gas is set to open unchanged Thursday morning at $2.62 ahead of a government storage report that is expected to show the second build of the newly-minted injection season. Overnight oil markets rose.

Weather forecasters don't see anything on the horizon that is likely to impede an orderly if not rapid near-term refill. Natgasweather.com said in a noon update Wednesday that "without any truly frigid Canadian air spilling into the U.S. over the next several weeks, heating demand will be mainly light, providing opportunity for supplies to make up ground on deficits in larger chunks after the next two weekly EIA [Energy Information Administration] reports. Simply put, the latest weather data continues to show a mild and active pattern will rule the U.S. potentially through the end of April, which we consider to be fairly bearish for weather sentiment." 

The 10:30 a.m. EDT release of storage data by the EIA is expected to show a build of about 11 Bcf. Ritterbusch and Associates calculates an 8 Bcf build, and a Reuters poll of 20 traders showed an average 11 Bcf increase with a range of +5 Bcf to +22 Bcf.

John Sodergreen, editor of Energy Metro Desk, said the "smart money is looking for a 15 Bcf draw out of the East (maybe a little less), a 20 Bcf build (at least) in the producing region and 6-7 Bcf build out west. It's a tricky week. We expect the market to move nicely once the clock chimes 10:30 on Thursday."

Industry consultant Genscape, utilizing a combination of pipe flows and supply-demand modeling, is looking for a 15 Bcf injection. "Our pipe sample has a 14 Bcf injection, while the supply-demand model is coming in at 17 Bcf. The supply-demand model shows production for the storage week averaged 73.2 Bcf/d, and demand averaged 73.9 Bcf/d. Imports from Canada and LNG were 5.4 Bcf/d, while exports to Mexico averaged 2.3 Bcf/d.

"An injection this week would be the second injection of the year, and continues to be on the early side. The last time we had logged two injection weeks by April was 2012. If our 15 Bcf injection estimate is realized, it will bring working gas inventories to 1,476 Bcf, well ahead of last year's same-date 826 Bcf but 175 Bcf off the five-year average."

In overnight Globex trading May crude oil recovered 84 cents to $51.26/bbl and May RBOB gasoline gained a penny to $1.7528/gal.

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