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April natural gas holds near unchanged as market looks to changing weather

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April natural gas holds near unchanged as market looks to changing weather

After shedding 5.0 cents in the prior session to settle at $2.681/MMBtu, NYMEX April natural gas futures were near unchanged overnight ahead of the Friday, March 16, open, as traders considered changing weather in store that spells diverging demand patterns. At 6:50 a.m. ET (1050 GMT) the contract was 0.3 cent lower at $2.678/MMBtu.

Below-average temperatures continue to hold over much of the country in the latest projections from the National Weather Service, encompassing the entire eastern third of the U.S. into most of the Midwest and a large section of the West in the six- to 10-day period then shifting in scope to grip nearly the entire northern U.S. and the bulk of the Southwest in the eight- to 14-day period. Average to above-average temperatures span most of the west-central U.S. and the balance of the West in the shorter-range view then settle over the southern U.S. further out.

Although lingering cold in store looks to generate late-season heating demand, higher low temperatures implied by the calendar look to limit any weather-driven demand support.

Already, colder weather that encouraged an uptick in heating demand to start March, failed to translate to a step higher in the rate of weekly storage draws in the latest inventory data from the U.S. Energy Information Administration.

The EIA detailed a 93-Bcf withdrawal in its latest storage report for the week ended March 9 that added to the series of smaller-than-average draws of late. It was above the 55-Bcf year-ago drawdown, but below the 97-Bcf five-year-average pull and the full range of estimates coming into the day.

Working gas stocks currently sit at 1,532 Bcf, or 718 Bcf below the year-ago level and 296 Bcf below the five-year average of 1,828 Bcf.

Another round of cold weather kept demand elevated in the subsequent days, with the EIA's "Natural Gas Weekly Update" for the week to March 14 attributing gains in gas consumption across all end-use demand sectors to colder weather. Total U.S. gas consumption was up 5% week on week.

At its current level, working gas in storage has rebounded since on Jan. 19, when it was 59 Bcf below the five-year minimum range and 486 Bcf lower than the five-year average, according to the EIA.

The longer-range forecast from the National Oceanic and Atmospheric Administration calls for warmer-than-normal temperatures for much of the country from April through June, with the exception of the Pacific Northwest and the north-central U.S., which generally should see equal chances of below-average, normal or above-average temperatures through the three months.

The warming trend moving into the spring shoulder season should sap heating demand and allow for a reversal from weekly storage withdrawals to injections.

Price activity for day-ahead natural gas was thoroughly mixed Thursday.

Looking at the key delivery locations, an almost 3-cent gain drove Transco Zone 6 NY spot gas price action to an index at $2.798/MMBtu, as a roughly 1-cent uptick brought benchmark Henry Hub next-day gas pricing to an average at $2.695/MMBtu. By contrast, a near 3-cent reduction steered PG&E Gate cash gas price activity to an average at $2.796/MMBtu, while an approximately 1-cent slump nudged Chicago hub pricing to an index at $2.538/MMBtu.

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In regional terms, Northeast day-ahead gas price activity added about 33 cents on the session to average at $3.394/MMBtu, as Gulf Coast cash gas price action logged a 1-cent decline in trades averaging at $2.604/MMBtu. Next-day gas pricing in the West climbed by almost 2 cents to an index at $2.097/MMBtu, as spot gas prices in the Midwest faltered by around 4 cents on average to an index at $2.365/MMBtu.

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Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power and natural gas index prices, as well as forwards and futures, visit our Commodities Pages.