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May gas futures continue to unwind amid imminent warming

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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021

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Essential Energy Insights - January 2021


May gas futures continue to unwind amid imminent warming

Aftera settle 2.8 cents lower at $1.990/MMBtu ahead of the weekend, May natural gasfutures extended losses in overnight trading leading up to the Monday, April11, open, as revisions to weather projections showing widespread warming thatspelled lackluster demand in the coming weeks combined with healthy supplies.At last look early Monday, May natural gas was down 6.4 cents to tradenear $1.926/MMBtu, against a backdrop of waning demand during the spring monthsand abundant supply.

Totalnatural gas in storage continues to weigh on the market, as inventories remainperched on a fresh end-of-season record high of 2,480 Bcf, after the U.S.Energy Information Administration reported a net to stocks for the weekended April 1 that was the final storage report week of the titular withdrawalseason. Stocks are 1,008 Bcf above the year-ago level and 874 Bcf above thefive-year average of 1,606 Bcf.

Marketparticipants continue to look for a wearing down of the record inventoriesahead of the next shoulder period, concerned that natural gas stocks couldbuild beyond capacity limits ahead of the winter withdrawal season.

Butweather changes in store inspire no confidence on the weather's ability togenerate substantial demand that would markedly impact storage levels.The latest National Weather Service forecast map for the six- to 10-day periodreflects above-average temperatures across nearly all of the country's northerntier, a majority of the Southwest and Florida. Below-average temperatures areindicated only for the southern Rockies and about half of the Gulf Coast, whileaverage temperatures are called for a majority of the Southeast, balance of theGulf Coast and a few areas in the Rockies.

Inthe eight- to 14-day outlook, below-average temperatures disappear and averagetemperatures shrink in scope to be confined to the southern tier of the GulfCoast, as above-average temperatures overtake nearly all of the U.S.

Thetransition to warmer weather should deflate lingering heating demand ahead ofthe onset of significant cooling load as the spring shoulder season unfolds,allowing for natural gas to flow more freely into underground storagefacilities and thereby encouraging the shift from weekly storage withdrawals toa steady stream of inventory injections that would further augment alreadyhefty supplies.

Incash trading, price activity for natural gas moved April 8 forSaturday-through-Monday flow was choppy, as market participants consideredvaried weather expectations alongside the typical weekend inclusion in therevised offering.

Acrossthe key delivery locations, gains on either side of 3 cents on average tookChicago and the benchmark Henry Hub spot gas prices to indexes at $1.987/MMBtuand $1.991/MMBtu, respectively. Conversely, a near 8-cent decline goosedTransco Zone 6 NY day-ahead gas price action to an index at $1.688/MMBtu, as ascant less-than-1-cent slump steered PG&E Gate cash gas pricing to an indexalmost unchanged day on day at $1.924/MMBtu.

On aregional basis, Midwest and West Coast next-day gas price activity were liftedby roughly 2 cents on average to indexes at $1.893/MMBtu and $1.662/MMBtu,respectively, while Northeast cash gas price action deflated by almost 4 centsin transactions averaging at $2.180/MMBtu and Gulf Coast spot gas pricingunraveled by around 1 cent on the session to average at $1.860/MMBtu.

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Market prices and included industry data are currentas of the time of publication and are subject to change. For more detailedmarket data, including power andnatural gasindex prices, as well as forwards and futures, visitour Commodities Pages.