May natural gas is set to open 2 cents higher Tuesday morning at $2.53 as traders seem unwilling to push the short side of the market and are electing to stand by for the moment. Overnight oil markets rose.

Traders are willing to close out existing short positions as fundamentals in the short term may have taken the market as low as it can go.

“While fresh 34-month lows would usually be reinforcing our bearish opinion, we feel that the market is becoming stretched from fundamentals given a continued supply shortfall against average levels for this time of the year,” said Jim Ritterbusch of Ritterbusch and Associates. “And while the deficit against five-year averages will likely be narrowing again per Thursday’s EIA [Energy Information Administration inventory report], we feel that a sizable injection of at least 40 Bcf has likely been baked in. As far as production is concerned, we see a relationship between the stepped-up decline in oil rigs and associated gas production that could potentially offer a quicker output peak than generally anticipated.

“While we still look for the supply deficit against the averages to be erased, possibly as early as next month, we don’t expect stocks to become burdensome as has been the case within the liquids. In other words, we can still envision some price strengthening back to a $3 handle amidst an early start to a hot summer that would crank up power demand in slowing storage builds. With this in mind, we have suggested accepting profits out of any short positions established last month within the $2.70-2.80 zone.”

Gas buyers across PJM won’t get much help from renewables if near-term forecasts are correct. WSI Corp. in its Tuesday morning outlook said, “A cold front and a ripple of low pressure will bring a round of rain across the Mid Atlantic and southern PJM today into tonight. High pressure will nose in behind this front during Wednesday, but there will remain a chance of showers across southern and western areas. High pressure will slowly erode during the end of the week allowing a weak disturbance to bring an increasing chance of showers across the power pool. The chance of showers may linger across southern areas into the weekend. Period rainfall amounts may range 0.75-2 inches, highest south. Temperatures will generally range upper 50s, 60s and 70s.

“Weak wind generation is expected [Tuesday], but wind gen is expected to increase overnight into Thursday morning. Output may top out over 3 GW. Wind gen is expected to decrease and become light during the end of the week.”

In overnight Globex trading May crude oil rose 46 cents to $52.37/bbl and May RBOB gasoline gained 2 cents to $1.8233/gal.