June natural gas is expected to open a penny lower Wednesday morning at $2.77 as market technicians wait for the market to confirm a major bottom is in place. Overnight oil markets rose.

The recent 5-day futures advance has had some market technicians thinking that the bears had lost control of the market as June futures traded as high as $2.824 Monday after settling at $2.606 just a week ago following the expiration of the May contract. The bears may have temporarily lost control of the market, but the bulls still have a lot of work to do to make their case for a seasonal cycle low or a major market bottom.

“Bulls have had a good run over the past six days. However, they are still far from confirming a cycle low is in place or that a major long term bottom is developing,” said Brian LaRose, market technician at United ICAP. “To do that bulls still need to lift Natgas above $2.939 (.236 of 4.544-2.443) and $3.039 (.236 of 6.493-2.443). “[We] have no reason to view this advance as anything more than a short term recovery until these levels can be breached,” he said in closing comments Tuesday.

Gas buyers, faced with the job of purchasing incremental volumes for MISO power generation, look to be facing an active weather system across the grid with accompanying large amounts of wind generation. “A complex and slow moving frontal system is expected to slide across the central US as the week progresses with rounds of rain and thunderstorms. Storms may be strong,” said forecaster WSI Corp in a morning report.

“A southerly flow ahead of the system will promote warm and somewhat humid conditions, but cooler, more seasonable air may begin to pour into the northern tier by Friday. A secondary storm system is expected to spin into the central US during the weekend with another round of rain and thunderstorms, which may be strong. Rainfall totals may range 1-2″+. A north-northeast flow around this system will support cool temperatures across northern areas with highs in the 50s and 60s, but southern areas may remain warm with highs in the 70s and 80s.

“A southerly breeze will support strong wind generation during the next couple of days. Output may peak in excess of 9 GW. Wind generation may subside from this peak during Friday into Saturday. However, the secondary storm system may cause wind gen to increase during Saturday night into Sunday.”

Tim Evans of Citi Futures Perspective sees “The consensus view for Thursday’s [storage] report is still forming, but estimates we’ve seen so far suggest its currently running in the 73-77 Bcf range of net injections, very close to the 75 Bcf date-adjusted build from a year ago and just marginally above the 67 Bcf five-year average for the date.”

Tom Saal, Senior Vice President at FC Stone Latin America, LLC, in his work with Market Profile anticipates the market will test Tuesday’s value area at $2.779-2.803. From there Market Profile methodology requires following a market break either higher or lower. Should June break above the Initial Balance at $2.824, trading targets of $2.861 to $2.897 would represent profit objectives. If June were to break below the Initial Balance at $2.751 then lower objectives of $2.715 and $2.678 would be in play.

In overnight Globex trading June crude oil surged $1.43 to $61.83/bbl and June RBOB gasoline gained 2 cents to $2.0838/gal.