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Colder US temperatures to linger as NYMEX gas futures trade rangebound


April to July futures settle below $3/MMBtu

Res-comm demand to top 46 Bcf/d, March 19

Larger drawdowns from gas storage forecast

  • Author
  • J Robinson
  • Editor
  • Richard Rubin
  • Commodity
  • Natural Gas

NYMEX Henry Hub natural gas futures prices continued trading sideways this week even as short-term forecasts predict more cold weather east of the Rockies and an accompanying surge in gas-fired heating demand.

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In morning trading, prompt futures were down about 15 cents on the day to around $2.43/MMBtu, according to exchange data from CME Group. As the US gas market looks for direction, the April contract has settled into a relatively narrow trading range over the past week in the mid-$2s, Platts data shows.

Bearish sentiment in the gas futures market comes as the winter heating and storage-withdrawal season approaches its end with recent and upcoming colder weather largely seen as too little, too late.

Over the past week, though, residential-commercial gas demand has surged, climbing to over 42 Bcf/d to set a new five-year high. Following a mid-week downturn, demand is expected to move higher again by this coming weekend as population-weighted temperatures across the Midwest plunge to the low-20s Fahrenheit, the Northeast approaches freezing, and Texas and the Southeast dip to the upper-40s.

Over the next week, US heating demand is forecast to average about 40 Bcf/d and reach a high March 19 at over 46 Bcf/d, data from S&P Global Commodity Insights shows.


Along with stronger heating demand, colder weather from mid- to late March is widely expected to fuel larger drawdowns from inventory, potentially helping to narrow a now massive US storage surplus.

For the week ending March 17, a small sample of early estimates show US stocks falling some 60-80 Bcf, likely outpacing the five-year average withdrawal of 45 Bcf for the corresponding week. In the penultimate week of March, preliminary forecasts are calling for another relatively large draw on storage, potentially upwards of 60 Bcf which would compare with a five-year average injection of 15 Bcf, EIA data shows.

Historically high storage levels, which could end the withdrawal season around 1.8 to 1.9 Tcf, or just below the five-year high, have become a drag on gas prices this year. Following a stunning selloff from late December through January, the futures market has remained in a prolonged slump with many now apparently convinced that a lingering storage surplus and strong gas production will remain a drag on prices through at least mid-summer. On March 15, the calendar-month futures contracts through July settled below $3/MMBtu.


In 2023, strong US gas production is another another factor that's become a drag on prices. Year to date, domestic production has averaged nearly 97.5 Bcf/d, despite a series of freeze-offs that dramatically cut output in both early and late January, S&P Global data shows.

In a recent investor note to clients, Goldman Sachs analyst Umang Choudhary said, "we see the need for further supply response in the form of activity cuts to balance the market headed for oversupply."

Choudhary went on to acknowledge the recent cuts in rig counts and completions crews announced by some public producers in fourth-quarter earnings, saying that further cuts would likely be needed to help balance expected supply growth in 2023 – particularly from private producers.