April natural gas futures continued to grind higher as traders continued to note an overall bullish mentality to petroleum markets and a general unwillingness to sell. The April contract rose 1.1 cents to $10.011, and May settled 1.4 cents higher at $10.078. April crude oil continued its march higher adding $1.17 to $109.92 after trading as high as $110.20.

“I think natural gas is being pulled up by crude and petroleum,” said a New York broker. He added that traders are citing the titanic Btu price differential versus heating oil and “heating oil was showing a $12 differential to natural gas, and you have to ask ‘what is going to bring this market [natural gas] back down?’

“Is it going to be imports or what?” the broker queried. According to his contacts, there were imports of liquefied natural gas from the Middle East that weren’t going to the Far East and couldn’t go to Europe because of a lack of storage capacity. “A lot should come over to the U.S.,” he said. “If that’s true maybe the natural gas market will retreat, but at the National Petroleum Refiners Association (NPRA) meeting in San Diego I couldn’t find one bear.”

He added that anytime natural gas prices retreat, buyers surface. “Traders see a lot of shorts who have been out there on the fund side, and they still have to cover. Crude and heating oil are at new highs, so what makes you want to sell natural gas?”

The weekly release of Department of Energy petroleum inventory figures, which were bearish, was not enough to thwart the bulls in either petroleum or natural gas markets. Crude oil supplies increased 6.177 million barrels, well above the 1.68 million barrels expected by traders, and gasoline inventories now stand at the highest level since 1993.

Short-term natural gas traders sense another push higher. “The market pulled back to the mid $9.80s after the crude number came out, but it ran right back up above $9.900 and we went out about unchanged. It looks like we are getting ready to make another run to maybe the $10.500 to $10.750 area,” said a New York floor trader.

“With crude oil keeping on going it looks like within the next couple of days natural gas is ready to pick its head up and make a run at the $10.25 0 to $10.300 area. We’ll see where we go from there,” he said.

He added that the April contract had been well bid at the $9.840 to $9.860 level the last couple of days and he expected the market to open Thursday before the release of the Energy Information Administration’s (EIA) natural gas storage report at unchanged, or 5 to 10 cents higher.

Estimates of Thursday’s release of EIA inventory figures are for a 75 Bcf to 90 Bcf withdrawal. Ritterbusch and Associates is expecting an 88 Bcf draw. Last year’s date-adjusted withdrawal was 104 Bcf, and the five-year average is 80 Bcf, government figures show.

As if the bullish market tone to natural gas provided by an exuberant petroleum complex were not enough, near-term weather forecasts suggest to fundamentalists an upbeat market tone as well. “Heating energy demands will remain above average across the eastern third to half of the United States for the rest of this week,” said meteorologist John Dee. He did concede that the demand would not be “record setting” and demand was not likely to be as high as it would have been a month or two ago. “Demands for heating energy in the major metro areas of the northeast U.S. and most of the Midwest will remain high for the week,” he predicted.

Looking ahead Dee said demand may decline in some areas early next week, but “a return to higher than average demand is seen for the second half of next week.”

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