May Natural gas was set to open Wednesday about 2.2 cents lower at around $2.634 as seasonality limits the impact of lingering April cold on a market weighed down by surging production.

“The overnight weather data was little changed to slightly milder, although the Global Forecast System model remains a little colder than the rest of the data, especially after next week,” NatGasWeather.com said. “…We continue to expect a rather seasonal pattern over the next two weeks with weather systems traversing the country every few days with mild conditions out ahead, and cool as they pass. But overall, it’s likely to remain a touch cooler than normal across the northern U.S., and mild to warm for the southern half of the country.”

The cold lingering into April could see the current storage deficit widen to minus 400-425 Bcf versus recent norms, according to the firm.

“We see bears maintaining weak control with May 2018 prices again dropping Tuesday after testing $2.72,” NatGasWeather said. “…Prices have gravitated back toward $2.70-2.72” ahead of the last several weeks of Energy Information Administration (EIA) storage reports. “Will that happen again Wednesday or will bears finally slam it lower?”

OPIS by IHS Markit said it’s expecting EIA to report a 14 Bcf withdrawal from Lower 48 gas stocks for the week ending April 6, 15 Bcf looser week/week based on “warmer weather across the U.S. Lower 48 and a slight uptick in dry gas production.

“…Gas inventories are at their lowest in nearly four years, owing to record withdrawals during extreme cold events in January and persistent cold weather through March and April,” the firm told clients this week. “Production growth this spring and summer is now expected to be stronger than anticipated at the start of the winter (largely because of associated gas).

“As such, the draw down in storage inventory has created a 3.5 Bcf/d summer injection demand for what otherwise would have been excess supply,” OPIS analysts said. “Thus, the cold start to this spring is likely less of a concern than it might otherwise have been.”

Portland, OR-based analytics firm Energy GPS said Wednesday Lower 48 dry gas production is estimated to have topped 80 Bcf/d over the last four days, part of an “eye-catching” increase in domestic production this spring.

“Looking at the steady increase in production since February it is no wonder that the Henry Hub forward contract has remained relatively weak despite the volatile weather pattern this spring that has driven the basis markets crazy,” Energy GPS said. “With 80 Bcf/d of production hitting the grid it is hard to see the upside for the market,” as heating degree days “continue to tumble through the month.

“The next test will be to see if power burns can remain strong enough at the given price to keep the grid balanced through the shoulder season, or if the market needs to price itself lower to manage the abundance of production.”

May crude oil was set to open about 45 cents higher at around $65.96/bbl, while May RBOB gasoline was trading near even at around $2.0407/gal.