Concern surrounding the delay in restarting the Independence Hub natural gas deepwater production platform in the Gulf of Mexico gave bulls a little boost overnight Tuesday and into Wednesday as June natural gas futures recorded an overnight high for the move of $11.794 before closing out Wednesday’s regular session at $11.598, up 17.6 cents from Tuesday’s close.

During Wednesday’s regular session the prompt-month contract traded between $11.546 and $11.716. The surprising part about Wednesday’s firmness was that it came without any support from crude futures, which pushed lower on the day. In focusing on the Independence delay, natural gas futures traders ignored that fact that June crude dropped $1.58 to close out the day at $124.22/bbl.

After the end of floor trading Tuesday Enterprise Products Partners LP said the Independence Hub would not be resuming production until mid-June (see related story). Traders had been anticipating a mid-May restart to as much as 900 MMcf/d. When the hub went off-line on April 8 due to a leak on the associated Independence Trail pipeline, the original repair estimate was “one to four weeks” (see Daily GPI, April 10). Overnight Tuesday, June futures had advanced to $11.794 in Globex electronic trading.

While the hub’s extended outage adds to the concern of some that natural gas storage will have a hard time refilling in time for the winter heating season, other market experts are not too concerned.

“The natural gas market is holding overnight [Tuesday] gains on the delay in restarting the Independence Hub, but while the added supply would potentially weigh on price, we don’t see a shortage in the market at present,” said Tim Evans, an analyst with Citi Futures Perspective. “Our storage forecast for Thursday’s report, for example, calls for 90 Bcf in net injections for last week, above the 79 Bcf five-year average rate. If the Independence Hub were on-line, that might have been a 96 Bcf build instead, but 90 isn’t a bad number. Give traders a day or two to recover from the surprise of the restart delay and we think the market may turn lower again.”

Golden, CO-based Bentek Energy’s flow model indicates an injection of 91 Bcf for the week ending May 9, bringing stocks 25.5% below the five-year high and 0.1% above the five-year average. The research and analysis firm expects a 54 Bcf injection from the East region, a 26 Bcf build in the Producing region and an 11 Bcf addition in the West region. The number revealed by the Energy Information Administration on Thursday morning will also be compared to last year’s 95 Bcf injection for the week.

Delayed production or not, market technicians are not optimistic that higher prices can continue. They see the market as a “tired bull.”

“Tuesday congested with an inside day that resembles a doji star [candlestick] top. However, because it was an inside day we must label it a spinning top — a congestion pattern, not a reversal pattern,” said Walter Zimmerman of United Energy. He added that the bullish case for another market high was still intact but not terribly convincing. “We do not like the shape of the price action since the $10.480 low. It has been acting heavy and lethargic, like a tired bull. This suggests that the next new high could be a bull trap — a sell opportunity,” he said in a Wednesday morning note to clients.

Some bulls are ready to be trapped. Phil Flynn of Alaron says to “buy June natural gas at $11 — stop $10.700.”

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