May natural gas was set to open Tuesday near even at around $2.680 as forecasters continued to note short- and medium-range colder temperatures, with warming toward mid-April.
The relatively muted overnight price action comes after the May contract gave up 5 cents Monday to settle at $2.683, including a sharp drop at the start of the session that erased gains from earlier that morning.
“The overnight weather data was colder trending this weekend through the middle of next week, then mixed after, with some datasets slightly colder (Global Forecast System) and others a little warmer (European),” NatGasWeather.com said Tuesday. “Most importantly, the overall theme remains the same, with the pattern cold enough to be considered bullish through the middle of next week, then warming and becoming less impressive April 12-18.
“There will still be occasional cool shots across the northern U.S. in mid-April, just with nice warm breaks in between in what we view as a relatively neutral setup, potentially trending slightly bearish after April 15-16.”
The colder weather early this month should lead to storage draws “for next week and the week after, when climatologically they should bring the first builds/injections of the seasons...what remains most important, to our view, is whether bears can hold $2.72 after taking it back Monday.”
In its six- to 10-day outlook issued Tuesday for April 8-12, Radiant Solutions said, “Changes are in the colder direction across the Eastern Half...as a result of stronger surface highs diving southward from a cold Canadian source region. The result is a period which averages in the much below normal category from the Midwest to the Mid-Atlantic, and strong belows are forecast at the start of the period in the Midwest as well.”
The 11-15 day outlook (April 13-17), meanwhile, was mixed, “trending colder in the West and warmer across the Eastern Half,” Radiant said. “The warm changes in the Midwest and East are focused in the early half of the period...However, variability remains the theme across the Eastern Half, as a cooler end to the period here has most locales within the normal category on average.”
ICAP Technical Analysis analyst Brian LaRose noted after Monday’s sessions that he had “warned that natural gas would not take a direct path to $2.817-2.841. The question now is can the bulls salvage the case for a levitation to this objective after Monday’s sharp retreat?
“To keep the case alive for more sideways to higher price action the bulls will need to prevent $2.627-2.614 from breaking,” or otherwise, he is “targeting a drop to $2.543-2.522-2.518-2.480 next for May...”
May crude oil was set to open about 26 cents higher at around $63.27/bbl, while May RBOB gasoline was up about 1.6 cents at around $1.9818/gal.