May natural gas futures on Wednesday continued to consolidate as market watchers were still unsure of the contract’s next move. After seesawing a bit, the prompt month ended up settling at $7.558, down 1.4 cents on the session.

After trading lower in overnight Access trading, May climbed in the morning of Wednesday’s regular session to notch a $7.70 high for the day. However, the prompt month was unable to hold onto those gains as it followed crude and heating oil futures lower in the afternoon.

While natural gas lost a little more than a penny and May crude subtracted only 19 cents to close at $55.85/bbl, May heating oil was the big loser on the day, dropping 3.44 cents to settle at $1.5867/gallon.

“Natural gas futures are…and have been consolidating after the run-up,” said Ed Kennedy of Commercial Brokerage Corp. “That is all their doing. He added that the buying is not all that heavy and the market continues to have undue influence from crude.

“The natural gas futures market’s direction is still a work in progress,” he noted. “I can’t say whether it is a bullish or bearish direction just yet. Markets do this. When you get a big move that’s called no price control. Now we are back in price control and we will continue with that until we get a read on the next move.”

Kennedy pointed out there is not a whole lot of demand for natural gas out there right now. “It’s chamber of commerce weather right now for much of the country’s key heating markets,” he said. “You don’t turn the heat or the air-conditioning on, you just open up the window and air out the apartment. It’s that time of season where you expect the market to act a little lackluster.”

As for whether or not futures have found a top, Kennedy said it is too soon to tell. “I’m not ready to call this a top just yet,” he said. “The consolidation will give us a read on that. It is still a work in progress.”

As natural gas futures remain in a state of limbo, the attention of traders now turns to the natural gas storage report release Thursday morning. The Energy Information Administration (EIA) report for the week ended April 1 should be interesting as it could reveal either the last withdrawal of the season or the first injection.

Industry expectations seem to be all over the map, with some looking for an 11 Bcf withdrawal while others are holding out for a 5 Bcf injection. The Reuters survey of industry insiders is calling for a withdrawal between 5 and 10 Bcf.

Sitting on the fence this time, the ICAP-Nymex storage auction on Wednesday produced an implied market forecast of no change. In addition to the industry indecision, the EIA’s historical storage data doesn’t lend any help either. According to the EIA, last year saw a 15 Bcf injection and the five-year average for the week is an 11 Bcf withdrawal.

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