Physical gas for Thursday delivery moved little in Wednesday's trading as firm quotes in the Rockies, California, and Texas were able to offset weakness in the Northeast. The NGI National Spot Gas Average shed a penny to $1.84, and weakness in the East was driven by a soft next-day power pricing environment.

Futures managed to stay on course, and the spot May contract now is less than 4 cents below last week's high of $2.074. At the close, May had risen 3.2 cents to $2.036, and June was higher by 3.6 cents at $2.119. May crude oil eased 41 cents to $41.76/bbl.

The higher close “is a good sign for the natural gas," said a New York floor trader. He said estimates of Thursday's storage report by the Energy Information Administration (EIA) had a bullish tone inasmuch as estimates were coming in around unchanged. Last year 49 Bcf was injected and the five-year pace is for a 22-Bcf increase.

Stephen Smith Energy Associates Inc. is calculating a 7-Bcf withdrawal, while industry consultant PIRA Energy figures on a 4-Bcf storage build. A Reuters poll of 23 traders and analysts revealed and average showing neither a build nor withdrawal with a range from a 14 Bcf decline to an increase of 10 Bcf.

Longer term, analysts are suggesting the key market driver for natural gas may be oil prices. Should oil prices stay low enough to discourage drilling, lower levels of associated gas production could reduce supplies of gas and put upward pressure on prices.

Low oil prices could bolster a dry gas strategy, keeping liquids prices low and cutting into associated gas production, just as a raft of new petrochemical, methanol and other manufacturing projects that would increase gas demand are nearing operation (see related story).

Given the number of factors playing on the gas market, volatility is a given over the next several years. But, "probably the most important thing as far as gas prices go, is oil," said global oil and gas strategist Vikas Dwivedi of Sydney, Australia-based Macquarie Group, pointing to a bullish slant for gas if oil prices stay low. Dwivedi shared his insight in a keynote address Tuesday during the 16th Annual LDC Gas Forum Southeast in Atlanta.

Analysts admit there are no market-moving weather events currently in play.

"There haven't been any bullish weather trends in the early morning or mid-day weather data to justify [Tuesday’s] move as the weather data continues to show a very comfortable U.S. pattern setting up across much of the country starting later this week and lasting through the end of April," said in a noon Tuesday update.

"Specifically, a cool front is pushing through the East Coast with showers and thunderstorms, with only modest cooling behind it. Additional rains are also falling over the southern U.S., where a weak cool front remains stalled."

In Tuesday's trading, the market reverberated back to the upside, supported by a Department of Energy forecast “for lower production and short-covering ahead of a Thursday storage report for the week ended April 8 expected to show little net change but a supportive comparison to the 22 Bcf five-year average net injection," said Tim Evans of Citi Futures Perspective in closing comments to clients Tuesday. Evans is calculating a 9 Bcf withdrawal for the week's EIA storage report.

Technical analysts are thinking that the recent advance in natural gas prices may be more in sympathy with the rest of the petroleum complex rather than a legitimate move higher.

"I'm really inclined to believe that this is more of a residual after effect to the climb in the rest of the energy complex than it is necessarily long-term bottoming action," said United ICAP analyst Brian LaRose in a Tuesday webcast.

He said a legitimate bottom couldn't be ruled out, and "all bottoms have to start somewhere, but the fits and starts in this advance have not exactly inspired confidence."

In physical trading, precipitous declines in the Northeast and more modest setbacks in the Mid-Atlantic and Marcellus were driven by a soft next-day power market. Intercontinental Exchange reported that on-peak power at the ISO New England's Massachusetts Hub fell $6.68 to $34.18/MWh, and on-peak power delivered Thursday to the PJM West eased 71 cents to $33.00/MWh.

Deliveries to the Algonquin Citygate tumbled $1.01 to $3.57, and parcels on Iroquois, Waddington rose 12 cents to $2.19. Gas on Tennessee Zone 6 200 L shed 63 cents to $3.79.

On Dominion South, next-day gas was quoted at $1.47, down 6 cents, and gas on Tennessee Zone 4 Marcellus shed 5 cents to $1.41. Deliveries on Transco-Leidy Line changed hands 4 cents lower at $1.41.

Other market points moved little. Gas at the Chicago Citygate added a penny to $1.92, and gas at the Henry Hub rose 4 cents to $1.98. Deliveries to El Paso Permian were quoted a penny higher at $1.76, and gas priced at the SoCal Citygate eased 2 cents to $1.97.