May natural gas is set to open a penny higher Monday morning at $2.52 despite both fundamentals followers and market technicians seeing prices working lower. Overnight oil markets rose.

Analysts looking at supply-demand balances are standing aside the market for now but are prepared to strike quickly to initiate a long position. Tim Evans of Citi Futures Perspective sees this week’s storage build report at 42 Bcf, greater than historical averages, and by April 24, the year-on-five year deficit has fallen to 98 Bcf. “A declining storage deficit shows the market becoming better supplied on a seasonally adjusted basis, which tends to reduce the market’s upside potential and keeps the downside open, most often correlating with lower prices over the intermediate term,” he said.

Market technicians see a case for sharply lower prices. “From the Elliott Wave perspective, for natgas bulls it is $2.476 support or bust. And the bust is a $1.590 to $1.430 target range,” said Walter Zimmermann, vice president at United ICAP. “For those who think this is an unrealistically bearish downside target, I would point to the major collapses already suffered by propane, ethane, butane and most recently, LNG. Maybe natgas holds $2.476 and rebounds. If it does, it will then need to better $2.965 for the bulls to have any case.

“Averaging the years 1992 through 2014 yields an average winter-to-spring rally as a 57% gain in spot contract value from an 11th February low to an 11th May peak. Here we are on 13th April and the bulls have nothing to show. Zero bounce. In the markets what fails to go up typically goes down. However, natgas has been just as unable to sell off as it has been to rally. Both bulls and bears have been equally frustrated; still see significant downside on a decisive weekly close below $2.476.”

Despite the case for lower prices, risk managers are standing aside. “Natural gas closed lower on the week, making lows not seen in almost three years,” said Mike DeVooght, president of DEVO Capital. “Natural gas continues to be pressured by more than adequate supply. This week’s EIA storage number was looking for a build of 10 Bcf, and got a build of 15 Bcf. Even though rig counts continue to drop, wells continue to be completed and production continues to increase. On a trade basis, we continue to stand aside at this time.”

In overnight Globex trading May crude oil rose $1.07 to $52.71/bbl and May RBOB gasoline gained 3 cents to $1.8381/gal.