Going out on a weak note, May natural gas futures went off the board Wednesday after completing its fifth consecutive trading day of lower settles. After notching a low of $7.000, May expired at $7.198, down 5.6 cents on the day.

The drop in natural gas futures was once again accompanied by weakness in the crude futures market. June crude closed 95 cents lower on Wednesday at $71.93/bbl.

Since May natural gas closed at $8.192 on April 19, the current down streak has seen traders shave 99.4 cents from the May contract. With May now in the rear-view mirror, June natural gas gets its prompt-month chance. On Wednesday, the June contract settled at $7.271, down 18.4 cents from Tuesday.

“The market really didn’t do a whole lot until the last half hour,” said Brad Florer, a broker with ICAP Energy. “We have now pulled back into the middle of our old trading range from $6.50 to $7.50 once again.”

Florer said crude continues to play a pivotal role in the direction and overall price level of natural gas. “Crude came off after it made new all-time highs last week and there was no buying in natural gas outside of what crude had already motivated,” he said. “In other words, without crude leading the way, we are going to see a pretty directionless natural gas market unless we get some significant heat or something else unusual. I really see us continuing to drift within this trading range.”

The broker added that nothing has really changed in the natural gas market arena, noting that it is still high supply levels versus summer crude, heat and hurricane concerns. “While the gravity behind high supply levels is still pulling prices downward, the fear factor of Iranian tension causing another crude spike and the concerns with summer and the hurricane season right around the corner is limiting the downside,” Florer said. “Because of all these factors, I think traders are just waiting right now.”

Fund brokers noted in Tuesday’s trading a substantial influx of what appeared to be speculative capital on the short side of the natural gas market. Locals and short-term traders were more sympathetic to the short side of the market in the early going as crude and products prices languished, but “once the (natural gas) market got to a certain point there was a lot of effort expended to keep a lid on the upside,” said a New York floor trader. May natural gas futures fell $0.304 to settle at $7.254 on Tuesday.

Short-term weather conditions currently seem to be a “nonevent” and likely to have little impact on natural gas futures. However, early trends in the Midwest hint at what might be a warmer than normal summer. Tom Skilling of WGNTV.com notes that Chicago experienced its 18th warmest spring in the past 135 years. The average temperature March 1 through April 25 of 2006 was 45 degrees, but the 135-year average is 41.2. The average number of days in Chicago when high temperatures exceed 70 degrees is five, yet this spring Chicago has already experienced eight.

Short-term weather forecasts have little to offer the bulls or the bears. The National Weather Service forecasts only modest departures from normal heating degree day (HDD) accumulations. For the week ending April 29 New York, New Jersey and Pennsylvania are forecast to receive 102 HDD, or 12 above normal, and the industrialized Midwest states of Ohio, Indiana, Michigan, Illinois and Wisconsin are expected to see 90 HDD, or four below normal. Neither section of the country is expected to receive any cooling degree days.

With May expiration out of the way, natural gas traders are now looking for direction cues from the Energy Information Administration’s (EIA) natural gas storage report Thursday morning for the week ended April 21. Industry estimates seem to be pointing towards an injection of approximately 70 Bcf.

Kyle Cooper of IAF Advisors estimates this week’s build at “about 70 Bcf” but cautions that “a large pipeline issued a rather large revision higher to last week’s number and thus a revision in the EIA report is possible.” He noted that there is a great deal of uncertainty with the questionability of last week’s report compounded by the Good Friday holiday.

According to a Reuters survey of 20 industry players, approximately 67 Bcf is expected to be injected into underground stores for the week. The ICAP derivatives auction Wednesday afternoon revealed a consensus injection of 81 Bcf.

The number revealed Thursday morning will be compared to last year’s 70 Bcf injection and the five-year average build of 58 Bcf.

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