June natural gas is set to open 2 cents higher Wednesday morning at $2.56 as traders hint at a short-covering rally from a deeply oversold market. Overnight oil markets slumped before the release of petroleum inventory data.

Tim Evans of Citi Futures Perspective sees the current year-on-five-year deficit flipping to a surplus by mid-May, and for this week’s injection report he forecasts a build of 82 Bcf, about in line with industry consensus. “By definition, a declining deficit or an expanding surplus confirms that the market is becoming better supplied on a seasonally adjusted basis, and most often translates into falling prices over the intermediate term,” he said in closing comments Tuesday to clients.

“However, after a full year of a declining deficit and declining prices, we don’t see the upcoming storage data as enough of a shock to preclude a short-covering rally if the market can get turned higher again. Crude oil has certainly demonstrated that it’s possible to rally in the face of bearish inventory numbers.”

Evans recommends holding a long position in June natural gas rolled from the May at $2.514 on Monday. He advises a protective stop at $2.44 to limit exposure on the trade.

According to National Weather Service data, little in the way of either heating or cooling load is expected for prominent energy markets for the week ended May 2. The agency’s figures show heating degree day (HDD) accumulations of 95 for New England, eight below normal, and 87 for the Mid-Atlantic or three above seasonal trends, and the greater Midwest from Ohio to Wisconsin is expected to see 89 HDD or two above normal. No cooling degree days are forecast for the period.

Tom Saal, vice president at FC Stone Latin America, LLC in Miami in his work with Market Profile looks for the market to test Tuesday’s value area at $2.536-2.520 and “maybe” test $2.589-2.559. His calculations of the weekly initial balance show a range of $2.545 to $2.481. Market movement above the upper range of the initial balance should be a “buy” signal, and conversely, declines below the initial balance should be sold, according to Market Profile methodology.

In overnight Globex trading June crude oil fell 27 cents to $56.79/bbl and June RBOB lost a penny to $1.9853/gal.