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April gas futures drift with changing weather

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April gas futures drift with changing weather

Following a settle 0.3 cent lower at $2.695/MMBtu ahead of the weekend, NYMEX April natural gas futures searched for direction overnight leading up to the Monday, March 5, open amid changing weather and demand expectations. At 7:05 a.m. ET (1205 GMT) the contract was down 1.2 cents at $2.683/MMBtu, while trading a range from $2.673/MMBtu to $2.726/MMBtu.

Lingering below-average temperature readings in outlooks continue to suggest a possible demand boost that would encourage additional withdrawals from underground storage.

The National Weather Service projection for the six- to 10-day period shows below-average temperatures holding over the lower tier of the Mid-Atlantic, nearly the entire Southeast, parts of the Gulf Coast, a few areas of the Midwest and Montana, as average to above-average temperatures encompass the Northeast, balance of the Mid-Atlantic, Florida, much of the Midwest, most of the Gulf Coast and almost all of the West.

Below-average temperatures expand in scope to overtake the entire Mid-Atlantic, Southeast, most of the Gulf Coast, more of Montana into North Dakota and much of the West Coast in the eight- to 14-day forecast, as average to above-average temperatures span the Northeast, Midwest, remainder of the Gulf Coast and balance of the West.

Weather-related demand support is limited, however, by higher low temperatures associated with the transition from winter to spring. Already, lackluster weather-driven demand is expected to have kept a lid on the rate of weekly storage draws in the recent inventory reports.

Warmer weather that drove down heating demand contributed to a well-below-average 78-Bcf withdrawal reported by the EIA in its latest storage data for the week to Feb. 23. While the pull from stocks was in the high end of the range of estimates coming into the day and greater than the 7-Bcf year-ago drawdown, it significantly trailed the 118-Bcf five-year-average draw. Total working gas stocks currently sit at 1,682 Bcf, or 680 Bcf below the year-ago level and 372 Bcf below the five-year average of 2,054 Bcf.

Heating demand remained deflated in the subsequent days as the EIA's latest "Natural Gas Weekly Update" for the week to Feb. 28 reflects a 2% week-on-week slump in residential/commercial-sector demand, feeding anticipation for another smaller-than-average draw from inventories in the next storage report that will cover the week to March 2.

The natural gas offering booked March 2 for notched gains in much of the country amid supportive post-weekend demand expectations.

Looking at the key delivery locations, a near 5-cent increase took PG&E Gate spot gas price action to an index at $2.812/MMBtu, as a 3-cent advance steered benchmark Henry Hub next-day gas pricing to an average at $2.700/MMBtu. A less-than-1-cent uptick nudged Chicago day-ahead gas price activity to an average at $2.413/MMBtu, as a roughly 4-cent slump against the broad uptrend drove Transco Zone 6 NY hub pricing to an index at $2.672/MMBtu.

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Regional averages were biased higher overall. Cash gas prices in the West were lifted by 9 cents on average to an index at $2.281/MMBtu, while Gulf Coast day-ahead gas price activity logged a near 1-cent gain in transactions averaging at $2.548/MMBtu. Next-day gas pricing in the Midwest climbed by about 3 cents to an index at $2.334/MMBtu, while Northeast spot gas price action added approximately 2 cents on the day to average at $2.524/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.