Breaking the five-day string of settling lower, the Nymex May natural gas futures contract on Tuesday fought its way to a gain of 4.4 cents. After falling to a low of $5.485 around noon eastern time, the prompt month spent the rest of the afternoon clawing its way back up to settle at $5.553.

“I don’t know what that crazy data was right before noon. It really sort of sold off,” said a Washington, DC-based trader. “I don’t know whether that $5.485 was a bad tick or not. Either way, it sure didn’t stay down there. It got right back up to that $5.52 level and sort of punched it higher in the afternoon.

“I’m not willing to say that I will never sell this market again, but I sort of want to see it closer to that $5.40 level instead of faking us out at $5.48,” he said. “So this $5.50-5.55 level is a magnet right now. The longer we defend this territory, the more I want to see $5.40 penetrated before I get ready to really say ‘OK, it’s a sale.'”

The trader added that while the market should sell off, especially taking into account this week’s pending storage report, it just hasn’t happened yet. Allowing that these weeks in April are always difficult to call when it comes to storage predictions, the trader noted that Thursday’s report “has the potential to really do some damage” because there wasn’t really any heating nor air conditioning load to speak of last week.

Looking to storage, Kyle Cooper of Citigroup said his final estimation for this week’s report is for a build of 20-30 Bcf. “Once again, uncertainty abounds as the various temperature models indicate a wide range, while pipeline data would suggest an even larger build,” he said.

“The weather forecasts remain slightly bearish, in our opinion, as predicted temperature patterns result in more heaters being turned off than A/C’s turned on,” Cooper added. “While continued crude strength may help support prices, unless the temperature-adjusted injections become bearish, or the temperatures are extreme, prices are expected to continue lower, and a test of the $5.00 level is not out of the question.”

Also adding to the mix were conflicting weather forecasts. While calling for warmer than normal temperatures throughout most of the country from May through July, WSI Corp. also went out on a limb — forecasting that California will join New England in the cooler than normal category over the three-month span (see related story).

“This forecast indicates not only higher average temperatures, but also increases the likelihood and intensity of heat events in this region,” WSI said. “The impact on power prices, particularly in New York and PJM, is potentially quite bullish. Higher loads from the power sector will also increase demand for natural gas from gas-fired generators and could likewise be bullish for natural gas prices, especially if inventory builds are impacted negatively.”

WSI’s forecast contrasts with the National Oceanic and Atmospheric Administration’s (NOAA) May-July forecast released last week (see Daily GPI, April 19). From May through July, the extreme West Coast along with the southernmost parts of the U.S. are expected to be 33-60% warmer than normal, with the largest increase to be felt in the Southwest, according to the NOAA’s seasonal forecast. The remainder of the country has an equal chance of coming in with above, below or normal temperatures.

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