April futures scored another impressive gain Wednesday as traders attempted to factor in a late-season bout of cold weather that is expected to have little long-term impact on inventories. At the close April futures had posted a gain of 8.1 cents to $4.335 and May added 8.1 cents as well to $4.412. May crude oil gained 78 cents to $105.75/bbl.

Analysts expect the first injection of the year in the West Region with Thursday’s Energy Information Administration (EIA) report on natural gas inventories. Industry consultant Bentek Energy utilizing its North American flow model, predicts that the 10:30 a.m. EDT release of inventory data will show a 2 Bcf increase in the West and a 12 Bcf build in the Producing Region. The East Region is anticipated to show a withdrawal of 23 Bcf for a total U.S. draw of 9 Bcf.

“This injection [West] is occurring at the same time as last year. SoCal is supporting this build in the region while a few facilities remain in withdrawal mode,” Bentek said. The firm also anticipates another injection in the Producing Region after last week’s small draw. Data from Texas showed a small draw of 0.8 Bcf during the week ended March 11 changing to an injection of 4.8 Bcf, the firm said.

Historically 17 Bcf has been withdrawn at this time when averaged over five years according to EIA data, and last year 7 Bcf was injected. A Reuters poll of 27 traders and analysts showed a sample average of a 6 Bcf withdrawal with a range of a 14 Bcf reduction to a 6 Bcf increase. Kyle Cooper of IAF Advisors forecasts a pull of 8 Bcf.

A plump snowpack in the Pacific Northwest is likely to take some off the edge of summer demand for natural gas, according to analysts at Canaccord Genuity, a Toronto-based investment banking firm. Their conclusion is derived from figures from the Northwest River Forecast Center, which increased its March runoff projection for the Columbia River to 11% above the long-term average. “With La Nina expected to bring a wet April to the region, Northwest snowpack should remain portly as we enter peak runoff season in May, suggesting relatively bright prospects for hydroelectric power generation this summer. We expect hydroelectric power generation will increase 15 TWh this year, which would ‘steal’ ~0.3 Bcfpd from gas-fired power demand,” the firm projected.

Analysts see a market more vulnerable to upside price surprises than downside. According to Peter Beutel, president of Cameron Hanover, a Connecticut-based energy consulting firm, the next “shoe to drop” is likely to be Thursday’s EIA inventory report. “Traders will be reluctant to expect another bullish report, and if we get one, it will propel prices up dramatically. On the other hand, a bearish report would send us back down, but we do not believe that it would take us to new lows.

“Prices are overbought enough and are into Bollinger Band resistance, so it may be difficult to repeat last week’s gains even if we do see another bullish report.”

Beutel also sees short-term weather playing a role in what could be a developing bull market. “Temperatures are going to be unseasonably cool this week, with colder-than-normal readings forecast through the end of March. Traders will be reluctant to sell too aggressively on any bearish report out Thursday because the following report, out next week, could be more supportive as colder-than-usual readings eat up gas this week.”

In spite of the calendar, forecasters confirm that Old Man Winter is not ready to pack it in just yet. “The models are still in excellent agreement on impressive late-season cold weather for the Midwest, East and some of the South later this week into early next week,” said Matt Rogers, president of Commodity Weather Group of Bethesda, MD. “A series of storm systems…[increases] snow chances for the Midwest, upper Mid-Atlantic and Northeast during this period. But then the models are in general agreement on offering a modest warm-up by late in the six-10 [day forecast] and early in the 11-15 day period. This moderation appears to only be a pause because another round of perhaps more widespread (eastern two-thirds of nation, including the South) cooler to colder weather returns by days 13-15.”

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