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April natural gas works off gains to finish in the red

In a seesaw session that saw the contract caught between changing weather, April natural gas futures succumbed to fundamental weakness in its first day as the lead contract, finishing the session with a 0.3-cent loss at $2.683/MMBtu.

The latest weather forecasts through March 12 show below-average temperatures across nearly the entire West and across portions of the Southeast in the six- to 10-day period, expanding in the eight- to 14-day period to engulf more of the West, the majority of the central U.S. and the Southeast over the longer-range period.

Average temperatures that grip a portion of the central U.S., the majority of the Gulf and a portion of the mid-Atlantic in the six- to 10-day outlook will shrink in the eight- to 14-day period to include only a portion of the mid-Atlantic, a small portion of the north-central U.S. and a portion of the Southwest.

Above-average temperatures that hold over the Northeast, a portion of the mid-Atlantic, a small area of the central U.S. and parts of Louisiana and Texas in the near-term outlook are expected to shrink in the eight- to 14-day period to include smaller portions of the Northeast and central U.S., and shift in the West to include small portions of Texas, New Mexico and Arizona longer range.

Market participants are attempting to determine the impact of the weather given the transition of the seasons from winter to spring.

"It is important to recognize that cold temperatures this time of the year are still much warmer than cold temperatures in the heart of the winter heating season," Energy Management Institute principal Dominick Chirichella said. "The heating season is winding down with the lower demand shoulder season right around the corner."

Higher low temperatures have already begun to diminish demand for heating. The U.S. Energy Information Administration reported a sizable 14% week-on-week decrease in total natural gas consumption in the week to Feb. 21. Residential- and commercial-sector demand was down 24% week on week largely because of warmer conditions in the eastern half of the country, the EIA said.

The demand figures will play into the storage figure for the week to Feb. 23, slated for release at 10:30 a.m. ET on Thursday, March 1. Lower demand is expected to have driven a modest storage withdrawal, with estimates thus far spanning a range in the 70s Bcf. A drawdown within the range of expectations will compare against a five-year-average pull of 118 Bcf and the 7-Bcf withdrawal reported for the corresponding week in 2017. The market closely monitors the five-year-average storage level as a gauge for the health of the total working gas supply.

With inventories currently at 1,884 Bcf, or 577 Bcf below the year-ago level and 433 Bcf below the five-year average storage level of 2,317 Bcf, the EIA said net withdrawals from working gas stocks matching the five-year average for the remainder of the withdrawal season would bring working gas stocks to a total of 1,290 Bcf by the traditional end of withdrawal season on March 31. That is 24% below the five-year average and the second lowest end of heating season level reported since 2010.

Withdrawal estimates for the subsequent three weeks are seen peaking only in the lower 80s Bcf, compared with five-year average pulls of 129 Bcf for the week to March 2, a 97-Bcf draw for the week to March 9 and a 53-Bcf five-year-average withdrawal in the week to March 16.

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, natural gas index prices, as well as forwards and futures, visit our Commodities Pages.