US Gas Stages Mini-Rally

US gas futures shook off last week's lethargy to rally 6.1%, or 15.4¢ this week as a more supportive weather outlook through mid-month promises that some heating demand will linger. Still, gas futures don't appear primed for a major breakout with storage rising faster than usual. The contract posted a 2.2¢ gain Friday to close at $2.68 per million Btu. A smaller-than-expected storage injection reported Thursday was ostensibly bullish but turned bearish as it lifted inventories above the five-year average for the first time since the week-long February cold snap flushed 575 billion cubic feet from storage over a two-week period. The US Energy Information Administration said 61 Bcf was injected into storage for the week ended Apr. 9, bringing working gas inventories to 1,845 Bcf. The pull was 6 Bcf below consensus forecasts but was enough above the 26 Bcf five-year average to re-establish a 0.6% seasonal surplus of 11 Bcf. Last year saw a 68 Bcf build. Storage levels are now 242 Bcf, or 11.6% below last year’s levels. Early estimates for the week ended Apr. 16 are for another above-normal build of 53 Bcf with a range of injections from 43 Bcf to 65 Bcf. That compares with a five-year average increase of 37 Bcf and a 47 Bcf injection during the same week last year. “Even with a somewhat ripe mix for upward price pressure, the prompt month will likely face resistance near $2.68/MMBtu to $2.71/MMBtu,” a Gelber & Associates analyst said in a note Friday. Independent analyst Stephen Schork agreed technical momentum indicators are mixed. "The market is currently shaded bullish but confidence is low given the direction in the 50-day and 100-day moving averages. Therefore, it is crucial for bulls that upside momentum establishes a beachhead above these two moving averages in the week ahead,” he said. Tom Haywood, Houston