May natural gas is set to open unchanged Friday morning at $2.02 as holders of short positions weigh the merits of continued market exposure. Overnight oil markets rose.
With Thursday's settlement over $2, interest in further selling may be limited. "Speculative short-covering is also a feature following the market's show of resilience in the face of a seemingly bearish storage figure out of the EIA yesterday," said Jim Ritterbusch of Ritterbusch and Associates in a Friday morning note to clients.
"Apparently, a further expansion of around 30 Bcf in the supply surplus against the five-year averages to a record level has been duly priced in, and the market is discounting some re-balancing off of declining production and some electric generation demand improvement. While these dynamics are always difficult to gauge on a current basis, it is obvious that potential sell hedgers have largely backed away from this market at sub-$2 levels and that the speculative community is becoming less interested in the short side. This will result in a broad based lack of selling interest that allows the market to advance on even a modicum of fresh buying.
"From a technical perspective, it would appear that additional gains lie ahead during the next couple of sessions, with May futures pushing up to about the $2.07 level by today's close and possibly to around the $2.10 area early next week. The weather factor will be diminishing in importance next week following a current cold spell that will be seeing much of the nation's Midcontinent experiencing freezing temperatures tonight."
Gas buyers assessing weekend supplies across the MISO footprint may have plenty of renewable power available to offset gas purchases. WSI Corp. in its Friday morning report said, "A quick-moving disturbance and arctic cold front will slide across the Midwest today with the chance for scattered rain and snow showers. This will usher a reinforcing shot of much below average temperatures into the power pool during the next couple of days with max temps in the upper 20s, 30s and 40s north; 50s, 60s to mid 70s south.
"A northwest flow will continue to support a period of elevated wind generation today with output near 10 GW. After a brief drop-off during Saturday, a gusty south to northwest wind associated with the next storm system will support a surge of wind gen during Saturday night into Monday."
In overnight Globex trading May crude oil gained $1.80 to $39.06/bbl and May RBOB gasoline rose 4 cents to $1.4292/gal.