With natural gas traders continuing to monitor production and export declines, along with signs of demand recovery as coronavirus-related lockdowns ease, futures were trading a few cents lower early Wednesday. The expiring June contract was off 3.9 cents to $1.754/MMBtu at around 8:45 a.m. ET. July was down 2.1 cents to $1.924.

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The latest forecasts heading into Wednesday’s trading showed slightly hotter trends over the southern part of the country June 5-7, according to NatGasWeather.

“However, the data still favors the upper ridge weakening June 8-11 and where the national pattern needs to be hotter,” the forecaster said. “…While weather patterns aren’t quite as bearish as compared to Friday’s data, they also aren’t quite as hot as needed to intimidate, but this is in need of close watching as a little hotter trends would go a long way.

“Going forward, besides weather trends the natural gas markets will be looking to see” if U.S. liquefied natural gas (LNG) exports “remain subdued, whether natural gas production continues declining, and if commercial and industrial demand recovers to near pre-Covid-19 lockdown levels.”

Looking ahead to Thursday’s Energy Information Administration (EIA) storage report, Energy Aspects issued a preliminary estimate for a 102 Bcf injection for the week ending May 22.

“Falling demand will push the injection rate back up, especially the erosion of heating load, as residential/commercial demand shrinks by 6.5 Bcf/d week/week,” the firm said. “Some factory restarts are running into coronavirus-related setbacks that will likely mute near-term upside from industrial gas use.”

Energy Aspects expects a higher injection rate even as its estimates show production fell off by around 2.5 Bcf/d during the period.

“Dry gas basins made up the bulk of the declines, with Appalachia down by 1.1 Bcf/d on EQT’s decision to curtail production through June,” the firm said. Receipts out of the Haynesville Shale “also lost 0.4 Bcf/d week/week due to weak cash prices disincentivizing production.”

EBW Analytics Group analysts noted that natural gas futures saw “solid gains” in Tuesday’s trading, helped by rebounding LNG feed gas flows and production declines, with the expiration of the June contract also potentially a factor.

“None of these catalysts, however, fully explains yesterday’s move up,” the EBW analysts said. “Changes in the weather forecast were neutral to bearish. The dip in production was relatively small, and the increase in feed gas flows most likely was a short-term blip that will be erased soon.

“Instead, with Memorial Day in the rearview mirror and temperatures starting to heat up, the market could be in a mood to move higher. The July contract faces resistance points at $2.00 and $2.04. If it can break through these levels, significant further gains are possible.”

July crude oil futures were trading 49 cents lower at $33.86/bbl at around 8:45 a.m. ET, while June RBOB gasoline was down about 3.8 cents to $1.0108/gal.