Natural gas futures continued higher in early trading Friday, extending the previous session’s rally as forecasts shifted cooler overnight. The May Nymex contract was up 7.0 cents to $1.756/MMBtu at around 8:35 a.m. ET.

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The front month has once again mounted a “solid rally” off of support in the $1.50s area, according to Bespoke Weather Services. However, the market likely needs to see “material tightening in balances” to sustain the rally, “either by way of demand returning, or by production falling more.”

As for the latest forecast guidance, models as of early Friday underwent cooler changes day/day for the first half of next week and for the first half of the second week of the outlook period, the firm said.

While Bespoke added 10 gas-weighted degree days to its official forecast, “we continue to head into what will be a very low demand time of year, as the strong cold relative to time of year departs over the next few days, leaving us with a variable, near-normal regime.”

Meanwhile, the Energy Information Administration (EIA) on Thursday reported a 73 Bcf injection into storage inventories for the week ending April 10, on par with last year’s build for the similar week but much larger than the 27 Bcf five-year average.

The 73 Bcf build fell within the exceptionally wide range of expectations but bested the lowest projection by a whopping 34 Bcf. Working gas in storage as of April 10 rose to 2,097 Bcf, 876 Bcf above year-ago levels and 370 Bcf higher than the five-year average.

“It was a bearish print by all measures, but the market shrugged it off,” said analysts at Tudor, Pickering, Holt & Co. (TPH). “…It appears investors were simply waiting for the ugly print to pass before stepping in as next week’s balance is trending much better and producers continue to announce material shut-ins.

“For next week, we’re currently modeling a 45 Bcf build, with residential/commercial being the game changer, up about 5 Bcf/d week/week. On the demand side, we’re still struggling to see any material Covid-19 impacts, as despite total electricity generation being down, gas demand for power continues to track above last year’s levels, indicating other power sources are taking the hit, which isn’t surprising given where gas is currently priced.”

This could open the door for a move back above $2 sometime in May as shut-ins accelerate in the coming weeks, according to TPH.

May crude oil futures were down $2.05 to $17.82/bbl at around 8:35 a.m. ET, while May RBOB gasoline was trading close to even at around 70.5 cents/gal.