April natural gas is set to open a penny lower Wednesday morning at $1.84 as traders balance ongoing fundamental downward pressure with an improving technical outlook. Overnight oil markets rose.

Analysts saw Tuesday’s gain as a response to a somewhat cooler temperature forecast, which added some heating load to the near-term supply balance. Going forward, Tim Evans of Citi Futures Perspective said, “Expectations for Thursday’s DOE storage report are still being compiled, but out read on what we’ve seen so far suggests the consensus is running at roughly a 5 Bcf net withdrawal for the week ended March 11. While that looks more supportive than the 7 Bcf net injection our model produced, we note it would still fall well below the 82 Bcf five-year average draw, allowing the 726 Bcf year-on-five-year average surplus from March 4 to expand further.”

Evans is expecting temperatures going forward to translate into more bearish storage comparisons in the weeks ahead. His figures show the year-on-five-year surplus mushrooming to 921 Bcf by April 1, “confirming that the market is still becoming more overstocked on a seasonally adjusted basis. While somewhat less bearish than a day ago, this rising surplus still puts an increased downward fundamental pressure on prices, reducing the upside potential and leaving the downside open.”

Evans suggests opening a short May futures position at $1.95 with a stop at $2.15 to limit risk on the trade. “On a trade back below $1.80 we would lower the buy stop to $2.05.”

From a technical standpoint, analysts note something of breakthrough. “The 12-month strip has managed to push through key resistance. The question now, can flat price do the same?” said Brian LaRose, a market analyst at United ICAP. “[We] still peg $1.892-1.917-1.963-1.979 as the gatekeeper.

“Bulls will need to punch through this band of resistance for our trend to shift to up. Succeed, and we can start plotting a course for a seasonal cycle advance. An average seasonal advance of 49% from the 1.611 low would target $2.400.”

In overnight Globex trading April crude oil rose 54 cents to $36.88/bbl and April RBOB gasoline gained a fraction to $1.4122/gal.