Natural gas for delivery Wednesday slumped as a weak power environment offered little incentive to make incremental purchases and the about-to-expire May futures contract eased as traders anticipated a closer convergence to the physical Henry Hub quote as well as the expected release of storage data showing an increasing storage surplus.

Only a few scattered points in the Marcellus and elsewhere made it into positive territory, and the NGI National Spot Gas Average shed 4 cents to $1.81. May futures gave up 3.1 cents ahead of Wednesday's expiration to $2.032 but still managed to hold the psychologically important $2 threshold. June retreated 2.8 cents to $2.159. June crude oil added $1.40 to $44.04/bbl.

Next-day power from New England to Indiana eased and made it difficult to justify purchases for power generation. Intercontinental Exchange reported on-peak power at ISO New England's Massachusetts Hub fell 6 cents to $32.20/MWh but deliveries to the PJM West terminal skidded $8.09 to $29.07/MWh. Next-day power at the Indiana Hub shed $1.34 to $33.41/MWh.

Packages priced on Texas Eastern M-3, Delivery fell 3 cents to $1.42, and gas bound for New York City on Transco Zone 6 was quoted 7 cents lower at $1.43.

Gas on Alliance and at the Chicago Citygate changed hands 4 cents lower at $1.92, and deliveries to Consumers fell a nickel to $2.05. Gas on Michigan Consolidated skidded 4 cents to $2.02, and gas at Joliet lost 3 cents to $1.92.

Gas headed west on the REX Zone 3 Expansion closed the gap somewhat on Midwest delivery points. Prices in the Marcellus rose relative to downstream destinations.

Gas on Dominion South rose a penny to $1.38, but packages priced at Tennessee Zn 4 Marcellus rose 7 cents to $1.39. Gas on Transco Leidy gained 4 cents to $1.39.

At Illinois and Indiana delivery points prices eased. Gas at Moultrie County, IL, at the interconnect with NGPL shed 4 cents to $1.83, and gas at the Edgar County, IL, delivery point with Midwestern Pipeline fell 3 cents to $1.86. Gas destined for Panhandle Eastern in Putnam County, IN, came in 3 cents lower at $1.85.

From New England to Wisconsin the week's heating load is forecast to be below normal. The National Weather Service predicted for the week ending April 30 that New England would see 119 heating degree days (HDD), or 12 above normal, and the Mid-Atlantic would endure 92 HDDs, or four above its seasonal norm. The Midwest, however, from Ohio to Wisconsin was expected to see just 67 HDD, or 24 below its normal seasonal tally.

Futures traders are optimistic prices have some room left to move higher. "A close above $2.01 is a decent close," said a New York floor trader. "Now that traders have tapped that number [$2.08], there is a good chance traders will try to move it a bit. The possibility is there for them to take it out and move the market up to $2.21 as people clear out of positions."

Market technicians are taking a close look at the pending expiration of the May contract on Wednesday and where the June contract is likely to trade. "While natgas took a hit, the June contract managed to hold above Monday's high in flat price," said Brian LaRose, a market analyst with United ICAP.

"Now with the May contract approaching expiration, we will be very interested in where June rolls into the spot position. To suggest the $2.176 high [Monday] represented a top of some kind June would need to crack $1.937. Bulls still have a shot at the $2.335-2.400 vicinity later this month otherwise."

Fundamental analysts are taking a more bearish stance. "[Monday's] 13-cent selloff after posting 10-week highs at the start of the week is suggesting some buying exhaustion as well as the likelihood that production slippage and some cooler temperature trends have been largely baked in," said Jim Ritterbusch of Ritterbusch and Associates in closing comments to clients on Monday. "Additionally, the market is expected to see a return to above normal storage injections with the issuance of this Thursday's EIA report. We are looking for a figure at around the mid 60 Bcf area that would easily exceed the five-year average build of about 52 Bcf.

"This renewed expansion in the supply surplus against normal levels could help to contain this strong price up spike that was kicked off last Tuesday from below the $1.90 mark. And while we will concede to some slowing in production that is finally beginning to spin off of the plunge in the rig counts, this output slippage could still be largely offset by an uptick in imports given Canadian supply availability. All in all, we are maintaining a short-term bearish stance for now as we continue to highlight a recent dramatic weakening in the front switch ahead of Wednesday's May contract expiration."

Weather forecasters are seeing a transition from less heating load to the beginnings of cooling demand. WSI Corp. in its Tuesday morning report said, "The latest six-10 day period forecast is for above average period anomalies across the West into the northern tier, as well as the Southeast. Below average period anomalies are forecast across the greater south-central U.S. and Northeast.

"Today's forecast is generally warmer than yesterday's forecast, except across the southern tier. As a result, CONUS GWHDDs are now down 5.1 to 29.3 for the period. PWCDDs are up 1 to 11.2."