After failing to punch through last Wednesday’s high, natural gas futures traded mostly sideways Monday, as neither bull nor bear could influence prices. At the closing bell, the May contract was 0.3 cents weaker at $5.125.

As is always usually the case, the talk Monday morning was over fresh storage data to be released Wednesday. However, even injection estimates (10-30 Bcf), which were less than half the 64 Bcf injection announced last week, were unable to sway the market higher Monday. Instead, traders choose to contrast their expectations against historical figures, which made for neither bullish nor bearish comparisons. The market injected 19 Bcf during the same period last year and the 5-year average refill is 20 Bcf. According to degree day heating tallies from the National Weather Service, the weather last week was 23.7% colder than last year, and 20.5% colder than normal.

Looking ahead, prices will continue to be heavily influenced by the rate of storage refills, especially in the event that the 303 Bcf year-on-year storage deficit either widens or narrows appreciably. However, storage is not the only game in town. According, to Mark Papa, CEO of EOG Resources, natural gas prices could receive some support from the price of alternative fuels.

“It appears to us that gas prices re-established a linkage to oil prices. Based on the current oil price strip it looks like the summer downside gas price may be $4.25 to $4.50. The summer upside is a wild card depending on temperatures,” he said in a first quarter results conference call Monday.

EOG has been “little nervous on May prices,” and has pre-sold about 200 MMcf/d of physical gas at a $5.50 Henry Hub price. It had already hedged 100 MMcf/d for April and May at $5.16. The company is hedging crude at $26.90 a barrel for the remainder of the year. “As long as crude oil hangs in there at about $27 a barrel, we think once you get below $4.25 you could easily justify switching back from resid and certainly from distillate.”

“More fuel switching to liquids occurred last winter than most of us thought possible in a short time-frame,” he added.

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