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April natural gas stalls overnight as market awaits storage data

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April natural gas stalls overnight as market awaits storage data

After ending the prior session 2.8 cents higher at $2.777/MMBtu, NYMEX April natural gas futures reflected little change overnight ahead of the Thursday, March 8, open and the midmorning release of the weekly storage data that is poised to become the next major catalyst for values. At 7:08 a.m. ET, the contract was 0.6 cent lower at $2.771/MMBtu.

Weather that deflated heating demand is expected to have kept a lid on the amount of natural gas drawn from underground storage facilities in the forthcoming inventory report due out from the U.S. Energy Information Administration at 10:30 a.m. ET on Thursday that will cover the week ended March 2.

Market analysts and experts anticipate a withdrawal from stocks from 55 Bcf to 61 Bcf, with consensus formed at a 58-Bcf drawdown. That would compare with a 57-Bcf year-ago pull and a 129-Bcf five-year-average draw.

Heating degree days were 5.3% fewer than last year and 18.2% fewer than normal in the week to March 3, according to degree day data from the National Oceanic and Atmospheric Administration.

The week's storage data would signal a step down in the rate of withdrawals as it would follow the 78-Bcf drawdown in the week ended Feb. 23 that left total working gas stocks at 1,682 Bcf, or 680 Bcf below the year-ago level and 372 Bcf below the five-year average of 2,054 Bcf.

Storage erosion looks to continue losing momentum approaching the traditional end of the withdrawal season on March 31, as midrange temperature forecast maps that show cold weather exiting major heat-consuming regions combine with calendar implications for moderating conditions in the changeover from winter to spring.

In its latest outlooks, the National Weather Service sees below-average temperatures holding over nearly the entire eastern third of the country, about half of the south-central U.S., a section of North Dakota and a few parts of the West in the six- to 10-day period, then shifting in scope to overtake almost all of the West but shrinking elsewhere to be contained to a few areas of the Northeast, mid-Atlantic and Midwest in the eight- to 14-day period.

Average to above-average temperatures initially span from Maine into a majority of the central U.S. and much of the West, but eventually shift to settle over most of the country's eastern two-thirds and the fringes of the Southwest.

Moderating weather in store is expected to keep demand subdued, likely limiting the amount of storage draws in the weeks ahead and allowing for more natural gas to remain in underground storage facilities than previously expected.

Current projections from the EIA point to an end-of-withdrawal-season inventory of 1,330 Bcf, which is 22% below the five-year average and the second-lowest end-of-season level since 2010, assuming storage draws match the five-year average for the remainder of the season.

Next-day natural gas values climbed in much of the country Wednesday, in line with steadily rising futures.

Looking at the key delivery locations, near 5-cent gains on average steered PG&E Gate and benchmark Henry Hub day-ahead gas prices to indexes at $2.861/MMBtu and $2.797/MMBtu, respectively. An almost 4-cent advance took Transco Zone 6 NY cash gas pricing to an index at $3.055/MMBtu, as a roughly 2-cent uptick brought Chicago hub action to an index at $2.638/MMBtu.

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On a regional basis, West Coast spot gas price activity defied the dominant uptrend with an approximately 1-cent slump in deals averaging at $2.276/MMBtu, while Gulf Coast next-day gas pricing added around 4 cents on the day to average at $2.682/MMBtu. Northeast day-ahead gas price action was lifted by nearly 6 cents to an index at $2.885/MMBtu while Midwest cash gas prices were bolstered by almost 5 cents on average to an index at $2.540/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.