April natural gas is set to open 2 cents lower Friday morning at $3.03 as traders view the market as slightly overbought and little in the way of supportive weather is seen on the horizon. Overnight oil markets rose.
Traders see the market as a short-term sell and a long-term buy. "The 150 Bcf withdrawal was spot on average street expectations and hence, price-neutral," said Jim Ritterbusch of Ritterbusch and Associates in closing comments Thursday. "The surplus versus five-year averages shrunk by a substantial 129 Bcf to 266 Bcf. But while additional shrinkage will likely be seen in next week's data, the overhang should hold above the 240-245 region.
"However, keeping pace with normal injections next month could be significantly challenged by comparatively low production levels and consensus prospects for a hot summer. Overall, we are still viewing the ability of this market to maintain more than 80% of this month's strong 15% gains in spite of little assistance from the weather factor as a bullish portent that could keep May futures elevated toward the high end of our expected $2.83-3.09 trading range.
"We still look for this market to evolve into a consolidation phase in which the $3 level per nearby futures represents somewhat of a no-man's land as far as trade entry is concerned. We are still looking to sell rallies in May futures to around the $3.16 level for short-term traders. But we still prefer to wait for an eventual decline to below the $2.90 level to start accumulating investment-type long holdings along with some deferred bull spreads."
Gas buyers for weekend power generation across the PJM footprint will have a moderate amount of renewable generation to work with to offset gas purchases early on if weekend weather forecasts prove correct.
"A gusty southerly wind will boost wind generation today through early Saturday as high as 4-5 GW," said WSI Corp. in a Friday morning report to clients. "Wind gen will subside during Sunday into early next week.
"A warm front and subsequent southwest wind ahead of a developing storm system over the central U.S. will quickly warm temps into the 50s, 60s to low 70s across the majority of the power pool today. The aforementioned storm system will track eastward and spread rain and thunderstorms into the power pool as the weekend progresses into early next week.
"Warm conditions will continue into Saturday, but some cold air associated with a backdoor cold front will bleed southward into portions of the Mid Atlantic during Sunday into Monday leading to a sharp contrast and changeable conditions."
In overnight Globex trading May crude oil rose 33 cents to $48.03/bbl and May RBOB gasoline added a penny to $1.6112/gal.