After dwelling in the mid $5.70s for most of the day, May futures were able to find some traction in afternoon trading, climbing up to a $5.83 high before settling at $5.809, up half a cent from Monday’s close. The second consecutive negligible day of trading came as little surprise to market-watchers, who had noted that trading this week was expected to be light due to religious holidays and spring break vacations (see Daily GPI, April 6). Volume on the day was 34,541.
After notching a session low of $5.711 in morning trading, the prompt month appeared to be taking a corrective stance to last week’s price run-up, which saw May hit its contract high of $5.99 last Thursday. However, as Tuesday afternoon wore on, May futures reached its high in near unison with a Nymex crude oil futures rally. On a short-covering push late Tuesday afternoon, May crude futures lifted 59 cents higher to close at $34.97/bbl.
With the week remaining quiet, attention turned to the Energy Information Administration (EIA) storage report set for release Thursday morning. “Natural gas prices again ended little changed as prices did rebound from session lows, probably in sympathy with crude,” said Kyle Cooper of Citigroup. “The weather forecasts remain quite supportive. There is little else new.” He said he is looking for a build between 4 and 14 Bcf for the week ending April 2, which contrasts with last year’s draw of 8 Bcf.
“The weather in early April is considered quite bullish as temperatures are forecast to be well below normal in major population centers east of the Rockies,” Cooper noted. “The injection pattern in April will obviously be considered crucial to how the overall injection season will shape up. Inventories above 3,000 Bcf are still expected by October 31, 2004.”
Lehman Brothers’ Thomas Driscoll pointed out that last week’s weather was warmer than normal across most of the nation, approximately 24% warmer than the 30-year norm and 17% warmer than last year.
“We expect a storage injection of 25 Bcf for the week ended 4/2/04,” Driscoll said on Monday. “We estimate that warmer weather reduced heating demand by about 29 Bcf versus last year. If our storage estimate is correct, the storage surplus versus a year ago will increase from 318 Bcf to 351 Bcf and the storage variance versus five-year averages would decrease from a 84 Bcf deficit to an 58 Bcf deficit.”
The analyst added that he is raising his end-of-season storage estimate by 40 Bcf to 1,040 Bcf to reflect this week’s estimate.
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