With more volatility expected ahead of the front month expiration Tuesday, natural gas futures were up sharply in early trading. The May contract was up 7.4 cents to $1.893/MMBtu at around 8:45 a.m. ET.

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Coming off a large swing in Monday’s session, the natural gas market continues to exhibit “wild volatility,” NatGasWeather said, pointing to further declines in oil prices and the imminent expiration of the May contract as contributing factors.

“We expect another volatile day today as the markets account for another sharp drop in front month oil prices Monday,” the forecaster said. The market will also be weighing “huge oil rig losses over the past month, demand destruction from Covid-19 and expiration of the May 2020 contract at today’s close.”

With Monday continuing a recent run of “extreme intraday price swings,” options expiration might have also played a role, according to EBW Analytics Group analysts.

The rally could have resulted from “stakeholders aggressively pushing the final settlement price higher,” the EBW analysts said. “To the extent this occurred, the May contract might reverse course again before it goes off the board this afternoon in a two-step that often occurs on the last two days of trading.

“But there was no shift in weather or other market drivers to justify yesterday’s swings. Weather forecasts barely budged. Production finally dipped below 90 Bcf/d” but liquefied natural gas (LNG) feed gas volumes also declined.

Predicting the direction of prices for the upcoming session is difficult, according to EBW.

As for the overnight weather data, NatGasWeather noted colder trends for next week in the Global Forecast System (GFS), which added more than 10 heating degree days (HDD) to the outlook.

“However, gains in HDD this time of the year just don’t equate to the same demand as core winter months,” the forecaster said. While degree day totals “are solidly above normal for next week, demand will still only be near normal. But the weather data has gained demand since late last week, which could have aided Monday’s gains” but is “not viewed as the primary driver.”

Meanwhile, looking ahead to Thursday’s Energy Information Administration storage report, Energy Aspects issued a preliminary estimate for a 72 Bcf injection for the week ending April 24, with the firm’s estimates showing “another step down” in gas-weighted heating demand driving a nearly 4 Bcf/d week/week decline in residential/commercial demand during the report period.

“In addition, LNG feed gas continues to run below capacity utilization, showing an additional 0.4 Bcf/d week/week loss to demand. Corpus Christi intake dropped by 0.2 Bcf/d week/week” coinciding with maintenance on a Transcontinental Gas Pipe Line meter restricting flows to the terminal, Energy Aspects said. “Elsewhere, Sabine Pass choked back flows by 0.2 Bcf/d week/week after early-week fog delayed loadings and pushed onsite inventories towards tank tops.”

June crude oil futures were off $1.31 to $11.47/bbl at around 8:45 a.m. ET, while May RBOB gasoline was up about 3.0 cents to around 67.8 cents/gal.