May natural gas was set to open Friday about a penny higher at around $2.697 as overnight weather guidance trended somewhat cooler.

NatGasWeather.com called the overnight data “little changed to slightly cooler in most datasets, but likely considered a touch cooler overall across the northern U.S. for late next week into the following…Overall, we see the pattern still trending from bullish toward neutral as the next two weeks play out.

“To our view, bears have been given many opportunities over the past month to push prices convincingly under $2.72 but keep failing to do so. The longer it takes without success, the greater the changes $2.727 again gets tested, potentially leading to a short covering rally at some point.”

With the storage deficit to recent norms increasing into April and inventories potentially ending near 1,320 Bcf before the start of injection, “we see the battle between bullish deficits and bearish record Lower 48 production continuing,” NatGasWeather said. “Eventually, one will conquer and a bigger move to finally break the recent tight trade range will occur.”

The Energy Information Administration (EIA) reported a 19 Bcf withdrawal from Lower 48 underground storage for the week ending April 6, a net decrease to stocks during a stretch that typically marks the start of injection season. Last year, 9 Bcf was injected during the period, matching the five-year average.

Total working gas in underground storage stood at 1,335 Bcf as of April 6, versus 2,060 Bcf a year ago and five-year average inventories of 1,710 Bcf, according to EIA. The year-on-year deficit widened week/week from 697 Bcf to 725 Bcf, while the year-on-five-year deficit increased from 347 Bcf to 375 Bcf, EIA data show.

“Compared to degree days and normal seasonality, the 19 Bcf withdrawal appears loose by 2.8 Bcf/d versus the five-year average,” according to Genscape Inc. “This is comparable to last week’s stat which appeared loose by 2.9 Bcf/d (degree days and storage were nearly unchanged week/week).”

After “two fairly loose stats in a row,” Genscape said the main drivers are production growth and the loss of heating demand.

“Our daily production scrape model has gone from 6.5 Bcf/d over the five-year average in January to 8.6 Bcf/d so far in April,” the firm said. “…Our monthly forecast is calling for production to be more than 11 Bcf/d higher than the five-year average by” the fourth quarter.

Meanwhile, residential/commercial (res/com) demand has been growing on a per degree day basis, “which was evident in record shattering storage stats during the coldest weeks this winter,” Genscape said. But “that added res/com disappears in the summer, and the added res/com demand will fade further as heating degree days approach zero.”

In terms of technicals, Thursday was “a constructive day, but the bulls will need to do more if they are going to have a shot at lifting natural gas back up to the $2.811/2.831 highs,” ICAP Technical Analysis analyst Brian LaRose said. “As the landscape overhead is littered with levels that could easily derail this rally, that could prove challenging.

“Expect a volatile drift higher, much like we saw during the advance from $2.530 to $2.811, if the bulls cannot blow through these levels all at once.”

May crude oil was set to open nearly unchanged at around $67.06/bbl, while May RBOB gasoline was trading fractionally lower at around $2.0473/gal.