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April natural gas ends week in shallowly negative territory

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April natural gas ends week in shallowly negative territory

April natural gas futures seesawed through Friday, March 2, trade and settled slightly lower with little to support sharp moves in either direction. The contract settled 0.3 cent lower at $2.695/MMBtu, while spanning $2.686/MMBtu to $2.728/MMBtu.

Fundamentals generally tend to weaken during the transition from winter to spring. Weather begins to moderate, which sends demand for natural gas for heating lower and allows more natural gas to remain stowed away as a cushion to build on ahead of the next major demand period.

The total U.S. working gas supply sits at 1,682 Bcf, or 680 Bcf below the year-ago level and 372 Bcf below the five-year average storage level of 2,054 Bcf, after the EIA reported 78-Bcf was pulled from stocks in the week to Feb. 23.

The withdrawal was above the market consensus that called for a 75-Bcf drawdown from stocks as well as the 7-Bcf withdrawal reported for the same week in 2017 but was well below the five-year average withdrawal of 118 Bcf.

Inventories are expected to have fallen by a below-average rate for the current week to March 2 amid mild weather that brought residential/commercial demand lower through the week to Feb. 28, according the EIA's latest "Natural Gas Weekly Update." Total U.S. gas consumption was flat week over week at 75.0 Bcf/d, but dry production was up 1% over the same period at 78.5 Bcf/d.

Cold weather in midrange forecasts continues to prop up the market, as a possible demand boost prompted some short covering.

Updated National Weather Service projections show below-average temperatures will hold over the Northwest, a majority of the Midwest, the bulk of the mid-Atlantic, the entire Southeast and about half of the Gulf Coast in the six- to 10-day period but will shift and shrink to be contained to parts of the West and the South Atlantic in the eight- to 14-day period.

Average to above-average temperatures reflected for the Northeast, fringes of the mid-Atlantic, small patches of the Midwest, the remainder of the Gulf Coast and the Southwest in the shorter-range view but could expand in the longer-range outlooks to overtake most of the country's eastern two-thirds and much of the Rockies.

Upside was limited by anticipation that the change of seasons should bring higher low temperatures ahead of a warming trend. The cold could still equate to higher demand for natural gas and a return to larger storage withdrawals in the weeks leading up to the traditional end of withdrawal season March 31.

The EIA sees overall inventories reaching the second-lowest end-of-season level since 2010 at 1,330 Bcf on March 31, assuming storage draws match the five-year average for the remainder of the withdrawal season.

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.