Buoyed by a large increase in projected demand from weekend guidance and by declining associated gas production, natural gas futures were trading sharply higher early Monday. The June Nymex contract was up 8.0 cents to $1.970/MMBtu at around 8:40 a.m. ET.

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Models over the weekend advertised “quite a jump” in weather-driven demand, according to Bespoke Weather Services. The firm’s forecast as of early Monday showed an additional 16 gas-weighted degree days compared to Friday’s outlook.

However, heating degree days in May “tend to have much less impact on actual natural gas demand, so it is unclear if this move is really all that bullish, but the cold is impressive for this time of the year,” Bespoke said. “All of this comes as a result of a strong high latitude blocking pattern, with both the Pacific and Atlantic sides favorable for eastern U.S. chill.”

The weekend forecast shift is likely to see the natural gas market start the week off with a move higher, but more back-and-forth swings could yet be in store for prices, according to analysts at EBW Analytics Group.

“Signs that production of associated gas is starting to rapidly decline and hopes that partial restarts of state economies might boost demand could also play a role,” the EBW analysts said. However, “the rubber meets the road” in upcoming Energy Information Administration weekly storage reports, “which illustrate net changes in the supply/demand balance.

“We expect this week’s report to reveal the first of nine straight 100 Bcf-plus builds, with the potential to add 1.1 Tcf to storage by the end of June, nearly doubling the storage surplus versus the five-year average. If this pattern verifies over the next few weeks, the front-month contract is likely to decline significantly.”

Analysts at Tudor, Pickering, Holt & Co. (TPH) said gas flows could determine the direction of the market for the next few months, with the driving question being whether or not supply shut-ins can offset a projected “collapse” in liquefied natural gas demand for June.

“Additionally, flow data should give us a real-time indicator of the progression on crude curtailments,” the TPH analysts said. “Supply is indeed falling, with late March averaging around 94 Bcf/d versus spot as of this morning at 91.5 Bcf/d (subject to revisions). Based on midstream commentary, in basins like the Bakken, flared volumes may have been shut in first, masking some of the actual declines early on.

“…Adding this to the total and excluding the Northeast, shut-ins/natural declines in oilier plays would indicate around 5-10% of associated gas volumes have been curtailed using an aggregate associated gas figure of around 30 Bcf/d.”

June crude oil futures were off 18 cents to $19.60/bbl at around 8:40 a.m. ET, while June RBOB gasoline was trading fractionally higher at around 77.1 cents/gal.