May natural gas was set to open Wednesday near even at around $2.781, with the market mulling large storage deficits and a withdrawal season that could extend another week.

Estimates for another deficit-widening storage report Thursday from the Energy Information Administration (EIA) helped the May contract rally on Tuesday to reach its highest close since mid-March, EBW Analytics Group CEO Andy Weissman said.

“With the storage deficit versus the five-year average expected to surpass 500 Bcf after Thursday’s weekly storage report is issued, it would not be surprising if May posted further gains before it goes off the board Thursday afternoon,” Weissman said.

“Next week, EIA is likely to report an injection near 60 Bcf, adding to the storage deficit. At yesterday's price levels, though, during the week ended May 3, EIA is likely to report a build of 115-120 Bcf, followed by seven additional 100 Bcf-plus injections -- and most likely bringing Tuesday’s incipient rally to an end.”

OPIS PointLogic this week said it expects the withdrawal season to last another week, estimating that EIA will report an 11 Bcf withdrawal from Lower 48 gas stocks for the week ending April 20.

“Although this is down by 25 Bcf from the prior week’s draw, owing to warmer weather across the U.S. Lower 48, a withdrawal for this time of year is highly unusual,” the firm said. “The withdrawal would reduce inventories to 1,288 Bcf and increase the storage deficit against the five-year average to 520 Bcf.”

Intercontinental Exchange EIA storage futures settled Tuesday at a withdrawal of 14 Bcf for the upcoming report.

Turning to the forecast, noted “only minor changes” to the overnight guidance, “with a mild pattern over most of the country for the first two weeks of May for very light demand.

“It’s worth noting the European model remains a little cooler than the rest of the data across the northern U.S. around May 5-6, but for this time of the year it’s only a subtle difference,” NatGasWeather said. “...Overall, until hotter temperatures arrive, the battle will continue between bearish record production and bullish storage deficits. With prices higher on the week, this suggests bullish storage deficits have the slight edge, at least so far.”

In terms of technicals, “the May contract appears to be on track for a test of $2.820-2.827-2.846,” according to ICAP Technical Analysis analyst Brian LaRose. “June is nearly there as well. So, the next question we need to be asking is will the June contract be able to pick up where May leaves off after expiration?

“If so, we are more than willing to raise the bar,” LaRose said. “The next set of hurdles for June in this case, the $2.895-2.903-2.910-2.925 zone, then the $2.962 level.”

June crude oil was set to open about 33 cents lower at around $67.37/bbl, while May RBOB gasoline was trading about 1.2 cents lower at around $2.0830/gal.