June natural gas is set to open unchanged Tuesday morning at $4.80 as traders look to see if emerging cooling load can enable June to hold the pivotal $4.80 level and perhaps move higher. Overnight oil markets rose.
Market bulls may get some weather assistance as forecasters call for warm temperatures to infiltrate the Southeast, Deep South and Texas as well as potions of California. Commodity Weather Group in its Tuesday morning report said, "[Tuesday's] forecast offers a bit stronger heat in California over the next few days with Burbank estimated to peak in the 95-96 F range tomorrow and Thursday due to decent offshore flow. The other warmer change on the cooling demand side is down across the South next week, with cities like Dallas and San Antonio edging up slightly more into the lower 90s with hotter upper 90s expected to be limited to west Texas instead.
"The Midwest is warmer overall today through the six-15 day but still leans in the seasonal to below-normal temperature range overall. The East Coast continues to be variable enough to have all three forecast periods average in the near-normal category yet again as it contends with both transient warming and cooling events, but no major/sustained demand concerns are expected," said Matt Rogers, president of the firm.
Analyst Alan Lammey of WeatherBELL Analytics sees Monday's solid expiration of the May contract hinting at further gains. "The price boost stemmed from unusually cool temperatures for a large percentage of the U.S., not to mention growing concerns over gas inventories. With the size of yesterday's move, it would not be out of the question to see some profit-taking emerge today, but if prices can close above $4.74, there's a good chance that June gas may attempt to test the mid to upper $4.80s in the near term," he said.
Others also saw the May expiration as a bullish portent but are willing to accept trading gains near term. "[W]e are having some difficulty seeing much upside follow-through from current levels in June futures, and we would still be willing to accept profits above the $4.80 mark on any fresh positions established on a scale down within the 4.60-4.70 zone," said Jim Ritterbusch of Ritterbusch and Associates in closing comments Monday to clients. "Some weekend shifts toward cool temperature trends during the next couple of weeks likely won't equate to enough lift in HDDs to sustain rallies. Furthermore, we don't expect much bullish assistance from Thursday's EIA report that will likely provide another sizable upswing in injection from the prior week's 49 Bcf hike."
In its Early View Forecast, Energy Metro Desk Friday tabulated an estimated 77 Bcf storage injection for the week ended April 25. Last year, 41 Bcf was injected, and the five-year average build is 58 Bcf.
Tom Saal, vice president at INTL FC Stone in Miami notes portions of the market showing exuberance, if not just a pervasive trend higher. "Back years, Cal '15, Cal '17 and Cal '19, continue to work higher even being overbought. The March 15/April 15 spread (aka "widow maker") continues to show strength as the injection months show negligible forward carry."
In near-term trading, his work with Market Profile shows a likely test of Monday's value area at $4.771 to $4.741 before moving on and testing $4.65 to $4.641.
In overnight Globex trading June crude oil gained 48 cents to $101.32/bbl and June RBOB gasoline added a penny to $2.9961/gal.