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May natural gas rebounds 9.2 cents to close above $2.00/MMBtu


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May natural gas rebounds 9.2 cents to close above $2.00/MMBtu

Losinga collective 10.6 cents in the prior two sessions, front-month May gas futuresrebounded higher Tuesday, April 12, on short covering. Trading from$1.922/MMBtu to $2.011/MMBtu, the contract ended above $2.00/MMBtu Tuesday at$2.004/MMBtu, up 9.2 cents.

"Thenatural gas market is rebounding sharply from Monday's decline, supported bythe DOE's monthly 'Drilling Productivity Report' that projects a 1.1% declinein US shale gas production for May, a step toward rebalancing the market,"Tim Evans, an analyst from Citi Futures Perspective, wrote in an early April 12research note.

Thelatest drilling productivity data issuedApril 11 shows that total output of natural gas across seven key shale plays islikely to fall 490.15 MMcf/d in May from April, or about 1.1%, to 45.93 Bcf/dcompared to 46.42 Bcf/d in April.

"Theremay also be some book squaring ahead of Thursday's storage report for the weekended April 8, with a possible net withdrawal a bullish contrast with a 22-bcffive-year average build for the week," Evans said.

Marketestimates for the upcoming storage report to be released April 14 by the U.S.Energy Information Administration are calling for anywhere from a withdrawal of13 Bcf to an injection of 10 Bcf for the week ended April 8. The figure willcompare to a five-year average injection of 22 Bcf and a 49-Bcf additionrecorded during the same week in 2015.

Forthe week ended April 1, the agency reported a net 12-Bcf injection to storage,leaving total natural gas storage at a fresh end-of-season record high of 2,480Bcf, which is 1,008 Bcf above the year-ago level and 874 Bcf above thefive-year average of 1,606 Bcf.

Inthe near to medium-term, demand for gas should prove to be lackluster in thecoming weeks, as the market enters the thick of the shoulder season. TheNational Weather Service forecast map for the six- to 10-day period is callingfor above-normal temperatures across most of the U.S. The agency is projectingbelow-normal to average readings for much of Texas and a portion of thesouth-central U.S. during the period.

Inthe eight- to 14-day outlook, above-average temperatures are expected toenvelop nearly all of the country, with average conditions seen in southernTexas during the extended period.

Most day-ahead natural gasprices turn higher

Inconjunction with the day's gains in the futures arena, most day-ahead gasmarket values were higher Tuesday. Prices advanced 5 cents to 10 cents onaverage at the major consuming hubs.

Inthe producing region, spot gas at the benchmark Henry Hub market in Louisianawas priced right around $1.95, up 5 cents or so. Product at FGT Zone 3 saw anaverage at about $1.90, also rising about 5 cents on the session.

Inthe Northeast, gas values worked higher with the recent strength in futuresoffering upside support. Next-day gas at the Algonquin Citygates near Bostonnotched an index at about $4.80, rising a solid 60 cents. To the south, gasdeals at Transco Zone 6 NY posted an average near $1.75, up about 5 cents. Inthe Mid-Atlantic, Tetco-M3 came in at an index right around $1.65, down a fewcents on the session.

Inthe Midwest, Chicago gas for Wednesday flow was priced at about $1.90, flat onthe day. Gas deals at NNG Demarc were marked right around $1.85, up about 1cent.

WestCoast gas prices climbed Tuesday, in line with the day's gains in futures.Product at PG&E in the north was assessed at an index near $1.95, increasing5 cents. To the south, gas at the SoCal Border was pegged at an average rightaround $1.80, up as much as 3 cents.

Market prices and includedindustry data are current as of the time of publication and are subject tochange. For more detailed market data, including our power,naturalgas and coal index prices, as well as forwardsand futures,visit our Commodities Pages. To view detailed EIA Weekly Natural Gas Storagedata, go to our Natural GasStorage Page.