June natural gas was set to open Friday near even at around $2.721/MMBtu, with the market not making any major moves overnight after the Energy Information Administration (EIA) reported a larger-than-expected storage injection Thursday.

EIA ushered in the start of injection season with a reported 62 Bcf build into Lower 48 gas stocks for the week ending April 27, about 10 Bcf looser versus surveys that had anticipated a build of around 51-52 Bcf. Last year, EIA recorded a 68 Bcf injection for the period, and the five-year average is 69 Bcf. The year-on-five-year deficit increased slightly for the week, remaining well north of 500 Bcf.

“Weather-adjusted the market was about 1.0 Bcf/d oversupplied,” according to analysts with Tudor, Pickering, Holt & Co. (TPH). The “warmer-than-normal weather” means a likely decrease in heating degree days (HDD), but “there are growing expectations” that it may cause cooling degree days (CDD) to “rise faster than normal and in turn, suppress the effective rate of injection.

“Over the past five years, CDDs typically surpass HDDs in late May/early June. If it occurs earlier this year, demand will be stronger than expected,” analysts said. “Northeast dry production was about 26.8 Bcf/d and is beginning to show signs of life” as the Rover Pipeline’s Phase 2 gets closer to full service, estimated by late May or early June. Liquefied natural gas exports also rose around 420 MMcf/d week/week “as both Sabine Pass and Cove Point saw increased inlet volumes.”

Societe Generale analyst Breanne Dougherty told clients the storage picture appears bullish even as the market appears unconcerned with current deficits.

“If storage is in fact the bellwether for market sentiment, something somewhere should be ringing, but maybe the market has put on its noise-canceling headphones?” Dougherty said. “The first net storage injection of the 2018 season came in stronger than expectation…but it is important to note that it comes a few weeks later than normal. Storage optics are bullish to us.

“We are bullish relative to the curve,” Dougherty added. The firm’s price average for the balance of 2018 is $2.97, versus the Nymex curve priced recently at $2.78. “We are less bullish relative to the market” for 2019 at $2.79, versus $2.70 for the curve. “We continue to highlight core summer 2018 contracts as buy opportunities at current price levels in particular (August 2018) and also recommend looking at first quarter 2019 given the potential for those contracts to see significant speculative trading upside if our summer 2018 base case scenario materializes.”

As for the weather outlook, Radiant Solutions said in its latest six- to 10-day (May 9-13) forecast that “concerns in this period continue to be with the strength of ridging over Western Canada, as a strong enough feature here could allow for disturbances tracking through the Northern U.S. to connect with a cooler source region.

“The forecast leans slightly cooler versus previous in the North, but models have been volatile here,” Radiant said. “A small cooler change also accompanies onshore flow early along the East Coast, while the Southeast is warmer late. Overall, the period remains a broadly warmer than normal one, with aboves being most steady in coverage in the West but average the period farther east as well.”

In the 11-15 day outlook (May 14-18), “the forecast in this period continues to feature a widespread coverage of above normal temperatures which span most areas across the Lower 48, and changes were additionally warmer versus previous early in the Interior West, at mid-period in Central and late in the East,” according to the firm.

June crude oil was set to open about 32 cents higher at $68.77/bbl, while June RBOB gasoline was trading fractionally higher at around $2.0954/gal.