The May natural gas futures contract moved lower in its first day in the lead slot Wednesday, March 28, pressured by the calendar as the lingering cold of an unrelenting winter will give way to the warmer air of spring. Starting in seesaw fashion, the contract spanned $2.690/MMBtu to $2.731/MMBtu and finished 1.6 cents lower at $2.698/MMBtu.
Market participants are looking beyond the remaining weeks of the natural gas storage withdrawal season, which should deliver a couple more weeks of pulls that are expected to be near or exceed the five-year averages. Withdrawals matching the five-year average would leave total working gas supply near 1.4 Tcf, about 19% below the five-year average level, by March 31.
For the storage report due out at 10:30 a.m. ET on Thursday, March 29, analysts and traders are looking for a storage pull from 65 Bcf to 80 Bcf, with a consensus formed at a 72-Bcf withdrawal from stocks for the week to March 23. The pull will compare with the 46-Bcf five-year average pull and the 58-Bcf drawdown reported for the same week in 2017.
Subsequently, lingering cold weather is expected to keep demand elevated and the natural gas supply eroding. Stocks could slip an additional near 29 Bcf in the week to March 30, compared with a 28-Bcf five-year average and the 4-Bcf pull reported the same week a year earlier, according to analyst expectations.
However, the weather is forecast to warm and drive down demand for natural gas just as natural gas production is slated to grow.
In the midrange period, stubborn cold will persist. The National Weather Service projects below-average temperatures over the Northeast, mid-Atlantic, Midwest, parts of the Northwest and the upper tier of the South, as average to above-average temperatures settle over much of the West and the balance of the South for the six- to 10-day and eight- to 14-day periods.
Longer-range weather outlooks for April through June call for warmer-than-normal weather over a large part of the U.S.,
Alongside demand erosion supported by weather changes, the latest rig-count data outlining a combined natural gas and oil rig boost of five in the week to March 23 to 995 rigs implies a boost to production.
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