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April natural gas grinds higher as cold could linger into late March

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April natural gas grinds higher as cold could linger into late March

Supported by chilly weather forecasts into the second half of March, natural gas futures traded on the New York Mercantile Exchange attempted to establish a new leg higher Monday, March 12, but pared gains and settled slightly higher on the day.

The front-month April contract found a low for the day at $2.718/MMBtu during overnight trade and rallied to a $2.804/MMBtu intraday high at midmorning but struggled to stay atop the $2.80/MMBtu point of resistance and closed the week's opening session 4.6 cents higher on the day at $2.778/MMBtu.

Although recent natural gas storage withdrawals have run below average, colder weather of late should help bolster heating demand. The U.S. Energy Information Administration's latest "Natural Gas Weekly Update" for the week ended March 7 reflects a 2% week-over-week gain in total U.S. gas consumption led by a 10% increase in residential/commercial-sector demand attributed to a cooldown throughout much of the country.

The uptick in demand is expected to drive storage withdrawals back to the low 100s Bcf when the next inventory report that will cover the week to March 9 is released on Thursday, March 15, signaling a step higher in the rate of stock erosion.

The latest storage data for the week ended March 2 outlined a modest 57-Bcf withdrawal that came in near the average anticipated 58-Bcf pull and equal to the prior-year drawdown, but well below the 129-Bcf five-year-average draw.

Total working gas stocks currently stand at 1,625 Bcf, or 680 Bcf less than last year at this time and 300 Bcf below the five-year average of 1,925 Bcf.

Midrange projections point to stubborn cold across major heat-consuming regions, which should keep demand buoyed in the weeks ahead, but higher low temperatures implied by the changeover from the winter heating season to the spring shoulder period will contain any weather-related demand support.

The National Weather Service sees below-average temperatures holding over most of the Northeast, a small area of the Midwest and nearly the entire West in the six- to 10-day period, then expanding to encompass all of the Northeast, much of the mid-Atlantic and a majority of the Midwest in the eight- to 14-day period.

Average to above-average temperatures initially stretch from the fringes of the Southwest into the bulk of the central and eastern U.S., but eventually shrink in scope to be contained to the balance of the mid-Atlantic, lower tier of the Midwest, the South and edges of the Southwest in the eight- to 14-day period.

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