With little fresh news on which to trade, natural gas futures chopped sideways Friday in light pre-weekend book squaring. Bears were content that Thursday’s gains did not carry over into Friday’s trading. Bulls, meanwhile, rested on their 47-cent gain for the week. May finished at $5.411, down a trifling 0.8 cents for the session.

With still little word on summer weather from either private or federal forecasters, the natural gas futures market is operating on only half of the supply-demand equation. Following two straight weekly storage reports showing net injections, the market was stunned Thursday when the Energy Information Administration said that 9 Bcf was pulled by the market during the week ending April 4. Because the weather for that week is so similar to the weather last week, market watchers and analysts are now calling for another modest withdrawal in this Thursday’s storage report.

“Our initial estimation for [this] week’s report looks for a draw in the 30 to 40 Bcf range,” offers Kyle Cooper of Citgroup. “Cold temperatures are once again likely to lead to a storage withdrawal that is considered bullish on a temperature-adjusted basis.”

However, the rate of storage injections or withdrawals is not dictated by weather alone, offers Ashmead Pringle of GSC Energy in Atlanta. “There is basically no forward carry out there. June is trading at $5.50 and December is trading at $5.60. Storage operators have no incentive to put gas into the ground right now…The only reason to store gas is if you’re betting on higher prices and there are less expensive ways to bet on higher prices.”

One way to take advantage of the lack of market contango, Pringle continued, is by selling the June-December spread. “By selling June and buying December, you stand to benefit by those two months diverging,” he reasoned.

In daily technicals, May has support at Friday’s $5.33 low, which corresponds with the top of a negative development area in the Market Profile trading system. Because this $5.24 to $5.33 area was so thinly traded in last week’s rally, says Tom Saal of Commercial Brokerage Corp. in Miami, it now serves as an area the market will want to “fill in.” Tim Evans of IFR Pegasus also sees the $5.25 level as important, noting that it stood as resistance prior to the breakout.

On the upside, new resistance is seen at the psychologically important $5.50 level as well as the March 20 high of $5.55.

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