Traders were still digesting last week’s late weakness as May natural gas futures in their first front-month regular session action traded in a tight range Monday before closing at $3.739, up less than a cent from Friday’s finish.

“The natural gas market looks like it is consolidating after the Thursday-Friday price drop, with May taking over as the front month after April’s expiration on Friday,” said Tim Evans, an analyst with Citi Futures Perspective in New York. “Natural gas is showing a healthier balance between follow-through selling and bargain hunting [Monday], and good relative strength compared with the petroleum markets, but still lacks enough heating demand to offset the weak industrial offtake to yield supportive storage data. The market may be able to take some time off from the downtrend in prices, but it remains at risk for a further decline.”

Front-month natural gas futures remained stoic while May crude dropped nearly 8% to $48.41/bbl, down $3.97. Industry chatter attributed the crude drop to international stock market weakness combined with a stronger U.S. dollar on Monday. The Dow Jones Industrial Average fell 254 points, which marked the largest single-day drop in weeks.

Natural gas traders are monitoring the storage situation closely after the industry was shocked last week by the Energy Information Administration’s report that 3 Bcf was injected for the week ending March 20. Evans said he believes the country reverted to withdrawals for the week ending March 27.

“Our early estimate is for a net withdrawal of 5 Bcf,” he said. The storage number reported Thursday morning at 10:30 a.m. EDT will be compared to the 30 Bcf draw from the similar week last year and the five-year average pull of 23 Bcf.

“Natural gas continues to work lower. A combination of weak demand, a lack of weather and increasing production continues to pressure the market,” said Mike DeVooght of DEVO Capital, a Colorado-based trading and risk management firm. “It has been our feeling that the gas market was searching for a bottom and we were starting to probe from the long side. But we do not feel it will be up, up and away; the bottoming process will take time. At this time we are trading, not investing, in the gas market.”

Bulls may have to wait a while. After the market closed on Friday Baker Hughes reported that for the week ending March 27, rigs drilling for natural gas in the United States fell by 47 to 810, the lowest since April 2003. The count is 637 lower than a year ago. According to some analysts, the rig count may slide to 700 to 750, a level considered sufficient to tighten the supply-demand balance. Phil Flynn of Alaron suggested that this “was planting the seeds of a rally, but it may take some time.”

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