Natural gas futures traders chose to play it close to the vest during the June contract’s first regular session action as the prompt-month contract, possibly opting to wait for fresh storage news Thursday morning before making their next move. Futures closed Wednesday at $3.403, down 3.7 cents from Tuesday’s finish.

Trading within a skinny 12-cent area on the day, the newly minted front-month contract recorded a high of $3.509 in morning trade before trickling lower to record a low of $3.389 just prior to the session’s close. Whether or not June futures will assume the slow downward crawl of the May contract remains to be seen.

“The natural gas market is testing the theory that recent price weakness was all tied to the May futures, with June free to test the upside now that May has expired,” said Tim Evans, an analyst with Citi Futures Perspective in New York. “However, the larger picture still includes the bearish supply/demand balance that has weighed on the market for months, and we’re looking for a larger-than-average 80 Bcf net injection to storage for last week to confirm that this balance remains intact. We continue to see that the market is working to establish a major longer-term bottom, but it may have more work ahead of it given the ongoing uptrend in the year-on-five-year average storage surplus.”

With current storage inventories 459 Bcf higher than last year at this time and 322 Bcf above the five-year average, there is no doubt that there is plenty of gas in the ground, but some market experts claim this fact has already been factored into prices (see Daily GPI, April 29).

Traders went into Wednesday’s session balancing positive economic news with uncertainty over the market’s response to weather. Analysts are debating how much this summer’s temperature patterns will impact natural gas prices. Over the weekend and early this week temperatures in the East soared to as high as 20 degrees above normal. The high in Boston Tuesday was a record 93. “These high temperatures are creating cooling demand in the North, and some people turned off their boilers and then flipped on their air conditioners just a few hours later, over the last few days,” said Peter Beutel, president of Cameron Hanover, a Connecticut-based energy consulting firm.

Beutel noted that normally that would be considered supportive for natural gas prices, but on Monday the expired May futures contract fell 4.4 cents. “With storage levels at such high levels right now, though, the market has not really taken any notice. This seems to be an especially bad harbinger for the summer ahead; if 90-degree heat in April can’t stir the market’s bullish juices, what will it need in July or August — Baghdad readings in Maine?” he queried.

Looking ahead to Thursday morning’s natural gas storage report for the week ended April 24, it looks like most industry insiders are looking for an injection between 75 Bcf and 85 Bcf. Bentek Energy’s flow model indicates an injection of 80 Bcf, which would bring stocks 3.2% below the five-year high and 22.4% above the five-year average. The research and analysis firm’s estimate assumes a 40 Bcf build in the East region, a 28 Bcf injection from the Producing region and a 12 Bcf addition from the West region.

The number revealed at 10:30 a.m. EDT by the Energy Information Administration will also be compared to last year’s 77 Bcf build for the similar week and the five-year average injection of 69 Bcf.

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