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April gas extends gains amid stubborn cold

After settling 2.5 cents higher at $3.076/MMBtu ahead of the weekend, NYMEX April natural gas futures extended higher in overnight trading leading up to the Monday, March 27, open, on the back of near-term weather support, as cold is expected to return to the major heat-consuming Northeast region. The contract changed hands from $3.115/MMBtu to $3.133/MMBtu and was 4.1 cents higher at $3.117/MMBtu at 6:50 a.m. ET (1050 GMT).

"The battleground between stubborn cool air and advancing mild air will continue to lie across the northeastern United States for the final days of March," AccuWeather senior meteorologist Kristina Pydynowski said in a March 26 report. A cooldown over the weekend is forecast to be followed by warming that should soon give way to a fresh blast of cold air into the latter part of the week.

"The next storm to target the northeastern U.S. should allow the cooler air to win out over another warm surge into the start of next weekend," Pydynowski said.

Stubborn cold across the Northeast despite the approach of the winter heating season's titular end on March 31 suggests a late-season boost to heating demand that should allow for additional storage withdrawals, which could threaten robust end-of-season inventory estimates pegged atop 2.0 Tcf.

Total working gas stocks currently sit at 2,092 Bcf, or 399 Bcf below the year-ago level and 266 Bcf above the five-year average of 1,826 Bcf, after the U.S. Energy Information Administration outlined an anomalous 150-Bcf drawdown from stocks for the week to March 17.

Cold weather and a late-winter storm that ramped up heating demand is seen to have allowed for the latest reported storage pull that bested the 21-Bcf five-year average withdrawal and defied the 13-Bcf injection seen in the corresponding week in 2016, even as it trailed consensus estimates that had called for a 154-Bcf draw.

Near-term weather expectations feed the potential for ongoing storage erosion through the close of March, but midrange outlooks encourage a changeover from weekly inventory draws to injections as the predominantly mild weather outlook implies lackluster weather-driven demand.

The latest National Weather Service forecast maps show the country engulfed by above-average temperatures through both the six- to 10-day and eight- to 14-day periods, leaving only the upper tier of the Northeast and portions of the West into west-central U.S. in the scope of average to below-average temperatures in the shorter-range view, and only Maine and a small area of the Northwest in the grip of average temperatures in the longer-range period.

Weather as forecast should sap lingering heating demand and keep significant cooling demand at bay ahead of the onset of the peak summer cooling season.

At the cash markets, the natural gas offering on March 24 that was revised for a three-day flow from Saturday through Monday was moved at mixed but mostly lower values amid pressure from the typical weekend inclusion in the altered package.

Looking at the key hubs, an almost 8-cent decline took Transco Zone 6 NY spot gas price activity to an index at $2.573/MMBtu, as a near 4-cent retreat steered Chicago next-day gas pricing to an average at $2.846/MMBtu. Conversely, a better-than-4-cent advance drove benchmark Henry Hub day-ahead gas price action to an index at $2.974/MMBtu, as a less-than-1-cent uptick nudged PG&E Gate hub pricing to an average at $3.176/MMBtu.

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In regional terms, Northeast cash gas price action notched a 5-cent decrease in trades averaging at $2.745/MMBtu, as Midwest and West Coast spot gas prices faltered by around 1 cent on average to indexes at $2.720/MMBtu and $2.527/MMBtu, respectively. Gulf Coast day-ahead gas pricing climbed by roughly 2 cents against the broad downtrend to an index at $2.866/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.