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Weather Outlook Mostly Unchanged; May Natural Gas Called Near Even

May natural gas was set to open Wednesday close to a penny higher at around $2.747 as forecasters noted minor adjustments to the weather outlook overnight.

NatGasWeather.com pointed to “slight cooler changes in the overnight weather data but still seeing a rather pleasant temperature regime over most of the country starting late next week and lasting into early May.

“This will transition what has been many weeks of bullish weather sentiment to bearish as demand becomes lighter,” the firm said. “Until then, the northern U.S. remains a bit chilly for this late in the season as a fresh weather system and associated cold blast pushes into the northern Plains with another round of rain and snow.”

Radiant Solutions said its latest six- to 10-day outlook Wednesday was little changed for the Midwest and East, with “most areas across the Eastern Half” leaning colder than normal.

In the 11-15 day (April 28-May 2) forecast period, Radiant said, “The forecast features a small change in the warmer direction, with these adjustments focused in the early half of the period as a brief round of slightly above normal temperatures make their way through parts of the Midwest and East.

“Otherwise, the forecast for the period continues to feature near normal temperatures across the Eastern Half and aboves persisting in the West. Below normal temperatures fade early in the South before reemerging in Canada and parts of the northern U.S. as the period progresses.”

Meanwhile, OPIS By IHS Markit this week expects the Energy Information Administration (EIA) to report a 24 Bcf withdrawal from U.S. gas stocks Thursday for the period ending April 13, 5 Bcf tighter week/week “owing to cooler weather across the U.S. Lower 48 and a slight uptick in exports to Mexico.

“...Drawdowns at this time of year are unusual; there was an injection of 47 Bcf in the same week of 2017,” according to the firm. “This year’s late-spring withdrawal will further widen the already-large inventory deficit, to 437 Bcf” versus the five-year average. “However, prices have barely twitched.” The muted price response “underscores supply-side strength, with dry gas production reaching a new record high of over 80 Bcf/d at the end of last week.”

Intercontinental Exchange EIA storage futures settled Tuesday at a withdrawal of 26 Bcf for the upcoming storage report.

Looking at the technicals, according to ICAP Technical Analysis analyst Brian LaRose, the only way “to signal $2.779 marked a top of some kind” is to “take out support. In this case support is all the way down at $2.655-2.647. As long as natural gas can hold above this zone we have little reason to abandon the case for an eventual levitation up to the $2.820-2.846 neighborhood. I’m inclined to treat any sideways to lower price action that unfolds here as corrective for that reason.”

May crude oil was set to open about $1.18 higher at around $67.70/bbl, while May RBOB gasoline was trading about 1.8 cents higher at around $2.0595/gal.

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