May natural gas is set to open 4 cents higher Monday morning at $4.76 as traders note a supportive weather outlook and great uncertainties surrounding storage refill. Overnight oil markets fell.

Following Thursday’s extraordinarily lean 24 Bcf storage injection, analysts see the market tighter given the thin build, but they do not see a clear path to heftier storage injections. For the moment, the market signal is to the producing community to step up output.

Tim Evans of Citi Futures Perspective sees the small injection as “adding to market worries over a slow start to the storage injection season. The refill was less than both the 34-36 Bcf consensus estimates and the 37 Bcf five-year average for the date. At 850 Bcf, U.S. total storage was also 850 Bcf lower than a year ago and 1,010 Bcf below the five-year average.

“Since the storage flows represent the intersection between supply and demand for the week, we don’t really know the extent to which the bullish surprise for last week reflected an unexpected drop in supply or demand that was more than anticipated. What it does imply is a tighter supply-demand balance that could carry over into the weeks ahead.”

Others are holding their current short positions. Mike DeVooght of DEVO Capital Management noted that the “build was smaller than anticipated and the gas market rallied to a six week high. On a trading basis, we will hold short positions and look for the market to continue to work back toward the $4 level,” he said in a weekend report to clients.

Specifically, trading accounts should continue to hold short May futures previously rolled from an April sale at $5.00 to 5.10, and end-users should stand aside. Producers and those with exposure to lower prices should hold short a May-October strip at $4.20 to 4.30 as well as a second position (May-October) from $4.50. The May-October strip settled Thursday at $4.760.

Forecasters are calling for cool weather in the near term. In its Monday morning six- to 10-day outlook, WSI Corp. showed below and much below normal temperatures north of a broad arc extending from Montana to Kentucky to Connecticut. “[Monday’s] forecast has trended considerably colder over most of the Midwest and Northeast while warmer on the West Coast compared to Friday’s forecast. Forecast confidence is about average, although there is some question as to how aggressively cold air penetrates the South.

“The ECMWF [European model] hangs up the cold front over the Tennessee Valley, which would keep areas south of CVG-DCA [Cincinnati-Washington, DC] warm through early next week. The a.m. forecast preferred a more aggressive polar high with cool air digging as far south as the Tennessee Valley and lower mid Atlantic.”

Tom Saal, vice president at INTL FC Stone in Miami, said “professional speculators are ‘hovering’ just under their [maximum] net long position…A thrust through their 200,000 [maximum] could be explosive!”

In overnight Globex trading May crude oil fell 18 cents to $104.12/bbl and May RBOB gasoline shed a half cent to $3.0491/gal.