May natural gas is set to open a penny higher Wednesday morning at $1.99 as overnight trading pushed toward a technical breakout and forecasters called for cooling, albeit moderate, next week. Overnight oil markets improved.

Going into the week’s trading, technical analysts noted that futures failed last week to breach key technical resistance, thus setting the stage for a move lower to test market support. United ICAP in a weekly report said, “The bear case for another set of new lows in natgas required a reversal lower by the $1.963 level. Natgas reversed lower from a $1.957 high [March 18]. The bull case pegs the $1.680 to $1.660 key support. The bear case suggests $1.590 to $1.510 key support.

“All of these levels are well within striking distance. And the background question is whether we get a preseason rally from one of these levels into a summer peak.”

The technical picture for natural gas changed with the strong performance by the expired April contract advancing nearly 10 cents Monday and Tuesday. In what may be a prescient comment Tuesday, technical analysts saw the market poised to break into new high territory. “Moment of truth for the bulls,” said Brian LaRose, technical analyst with United ICAP in closing comments to clients.

“If this rally is legit, the May contract should be able to blow through $1.980 (flat price resistance) and $2.023-2.043-2.056 (May contract resistance). Succeed and there is immediate airspace up to $2.112-2.138 (a=c from 1.611) next. Fail to punch through resistance and a larger degree ABC type pattern will have an opportunity to develop from the $1.957 high.”

Forecasters are looking for cooler temperatures next week. Commodity Weather Group in its morning six- to 10-day outlook said, “Next week’s brief cooler to colder period gets slightly stronger again on [Wednesday’s] update for the Midwest, South and East. There are also some cooler Western changes late next week compared to yesterday’s outlook.

“This idea of a bit more robust cooling next week goes back to the stronger-looking 11-15 day outlooks from last week, but the epicenter of coolest anomalies is more toward southeast Canada and the Northeast instead of the Midwest and Plains. Despite a second day of cooler adjustments, there are still cooler to colder risks to our outlook next week, especially toward the Northeast. Otherwise, the pattern trends warmer for the 11-15 day, but at a slightly slower pace again,” said Matt Rogers, president of the firm.

In overnight Globex trading May crude oil rose 62 cents to $38.90/bbl and May RBOB gasoline rose fractionally to $1.4811/gal.