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The recent bounce follows a sharp sell-off that pushed prices into technically oversold territory ahead of the May contract’s expiry. Monday’s settlement at $3.170/MMBtu marked a strong rebound from Friday’s low of $2.973, the weakest level since mid-November. June futures, now the front month, extended gains with a close at $3.343.
Analysts, including Carley Garner of DeCarley Trading, point to a successful retest of the December breakout trendline near $3.300 as a technical confirmation of support. Garner noted that this same level sparked a rally in March, and its defense now reinforces the potential for another leg higher.
How Does Light Near-Term Demand Affect the Bullish Case?
However, the demand outlook in the immediate term remains soft. Forecasts from NatGasWeather show most of the U.S. experiencing mild temperatures in the 60s-80s through early May, limiting heating and cooling demand. National consumption is expected to remain very light, with expectations for a storage build exceeding 100 Bcf this week.
Is Inventory Pressure Capping the Upside?
Last Thursday’s EIA report added bearish weight, showing a storage injection of +88 Bcf for the week ending April 18—well above both the +75 Bcf consensus and the 5-year average build of +58 Bcf. Still, inventories are down 20.2% year-over-year and sit 2.3% below their 5-year seasonal average. Meanwhile, European storage lags its seasonal norm, at just 38% full compared to the 5-year average of 48%.
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