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March natural gas ends seesaw session with modest loss

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March natural gas ends seesaw session with modest loss

In a seesaw trading session, March natural gas futures settled with a modest loss Friday, Feb. 2, after early larger losses gave way to unsustainable short-covering gains. The contract settled 1.0 cent lower at $2.846/MMBtu, while trading a range from $2.840/MMBtu to $2.920/MMBtu.

Mixed weather outlooks for the midrange support short-covering as a return of colder air in the six- to 10-day period is expected to reignite heating demand after a period of mild weather.

For the six- to 10-day period the National Oceanic and Atmospheric Administration sees a wide area of below-average temperatures spanning from a portion of the East across the majority of the central U.S. The below-normal temperatures are flanked on either side by average temperatures that span south from Maine into a portion of the Gulf, and from a portion of Montana south into west Texas. A portion of Florida and the majority of the West are forecast to see above-average temperatures.

The below-average temperatures recede in the eight- to 14-day outlook, but encase the major heat-consuming Northeast and portions of the mid-Atlantic, north-central and Gulf regions. Average temperatures are forecast for the Southeast, the majority of the Gulf and a portion of the central U.S., while the entire West and the majority of the west-central U.S. should see above-average temperatures.

While lingering weather-related demand is keeping the upside viable amid expectations for a shift from modest storage withdrawals to larger pulls for the colder-weather periods, the anticipation of continued moderating weather and a slower rate of storage erosion heading toward spring limits the upside.

Weather forecasts that expand into April are keeping pressure on the market. The Weather Company is calling for warmer-than-normal weather across the southern U.S. and colder-than-normal conditions for the northern half of the country from February through April. The National Oceanic and Atmospheric Administration sees a 40% or better chance that above-normal temperatures will prevail across much of the Northeast, the Southeast, the south-central U.S., Texas and parts of the West Coast over the same period, as average to below-normal temperatures settle over the Midwest and parts of the Northeast, Northwest and the north-central U.S.

Natural gas inventories fell by a less-than anticipated and smaller-than-average 99 Bcf in the week to Jan. 26.

Weather contributed to the smaller storage withdrawal as degree day data from the National Oceanic and Atmospheric Administration for the review week ended Jan. 27 shows heating degree days were 25.1% lower than normal for the period.

The pull brought total U.S. working gas supply to 2,197 Bcf, or 526 Bcf below the year-ago level and 425 Bcf below the five-year average storage level of 2,622 Bcf.

End-of-season inventories will be helped by storage pulls that trail the five-year averages for the remainder of the withdrawal season to March 31.

Analysts and industry experts looking ahead to the storage report for the current week to Feb. 2, expect a ramp up in the rate of storage erosion as colder weather is expected to have driven stronger demand for heating.

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