Nat Gas futures have continued to remain above the old upper range support level of $3.50/mmbtu for the longest period of time since the beginning of the winter heating season. In fact the spot contract breached the $3.66/mmbtu resistance level for the second time this week and this time it actually settled above. Currently $3.66/mmbtu is now the new support area with the next resistance at $3.76/mmbtu. Nat Gas futures have been in a steady upward trend since bottoming in mid- February. This is the strongest rally in Nat Gas prices since the fall of 2012.Today the EIA inventory will be bullish when compared to both last year and the five year average. The deciding factor will be how the number compares to the industry expectations. The Reuters industry poll is looking for a net withdrawal of 134 BCF. To the extent that it exceeds this level the futures market will likely move closer to a test of the next resistance level. If not support will be once again tested and possibly breached to the downside.The next few inventory reports will likely see lower net withdrawals lower than today's report as the winter heating season winds down. I would expect next week's report to show a net withdrawal in the 50 to 75 BCF range... above its comparable historical period but much lower than what this week's report will show. That said the latest NOAA short term forecasts are still projecting below normal temperatures for the next several weeks suggesting that the inventory withdrawal season could last past its normal historical ending time. This would be supportive for prices and could result in another push to the upside in futures prices before entering the lower demand shoulder season.This week the EIA will release its inventory on its normal schedule and time... Thursday March 14th at 10:30 AM. This week I am projecting an average withdrawal of 120 BCF from inventory. My projection for this week is shown in the following table and is based on a week that experienced an above normal level of Nat Gas heating related demand. My projection compares to last year's net withdrawal of 66 BCF and the normal five year net withdrawal for the same week of 74 BCF. Bottom line the inventory deficit will widen modestly this week versus last year while the surplus will narrow compared to the five year average if the actual numbers are in sync with my projections. This week's net withdrawal will be bullish when compared to the historical data and as of today the market seems to starting to price that outcome into the futures market.If the actual EIA data is in line with my projections the year over year deficit will widen to about 482 BCF. The surplus versus the five year average for the same week will come in around 149 BCF. This will be a bullish weekly fundamental snapshot if the actual data is in line with my projection. The early industry projections are coming in a range of 90BCF to about a 150 BCF net withdrawal with the Reuters market consensus at 134 BCF.WTI was the only commodity in the oil complex that was able to hold onto to a small gain on Wednesday. However, overnight WTI has given back yesterday's small gain. Once again the main feature in the oil market was another large narrowing move of the Brent/WTI spread. The push lower came after the EIA showed a surprisingly large 1.5 million draw in Cushing inventories even as refinery utilization rates in PADD 2 declined by 2.7 percent as the spring refinery maintenance season gets underway. In fact over the last two weeks refinery run rates in PADD 2 have declined by 8.3 percent or a decline in crude oil inputs by about 325,000 bpd. Oil is moving out of the region in spite of the declining demand for crude oil.Global equity markets are continuing to struggle to hold onto to last week's gains. The Index declined by about 0.5 percent over the last twenty four hours with the year to date gain narrowing to 1.1 percent. On the week the Index has lost about 1.2 percent. Brazil remains at the bottom of the list of bourses with Hong Kong joining Brazil in the loss column for the year. As has been the case for most of this year Japan's bourse continues to surge higher and is inching toward a 20 percent gain for 2013. London and the US are the only other bourses showing double digit gains for the year. Global equity markets have been neutral to biased to the bearish side for the oil markets this week as well as for the broader commodity complex.I am maintaining my view at cautiously bullish as long as the spot contract remains above the $3.50/mmbtu level. As I have been discussing for weeks the direction of Nat Gas prices are primarily dependent on the actual and forecasted weather pattern now that we are still in the heart of the winter heating season and currently those forecasts have turned a tad more bullish at the moment.I am maintaining my view of the entire complex to neutral as the oil complex appears to be putting in a short term bottom. I do not think the oil market trend has changed just yet (thus my neutral rating) but it is starting to show the signs of change and thus it is time to be on the alert.Markets are mixed as shown in the following table.DominickBest regards,Dominick A. Chirichelladchirichella@mailaec.comFollow my intraday comments on Twitter @dacenergy
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