After ending the prior session up 3.1 cents at $2.698/MMBtu, NYMEX April natural gas futures moved in seesaw fashion overnight ahead of the Friday, March 2, open, as traders considered a changing fundamental landscape. At 6:50 a.m. ET (1150 GMT) the contract was 1.1 cents higher at $2.709 while trading from $2.686/MMBtu to $2.728/MMBtu.
The U.S. Energy Information Administration's latest storage data outlined a net 78-Bcf withdrawal for the week ended Feb. 23 that took total working gas stocks to 1,682 Bcf, or 680 Bcf below the year-ago level and 372 Bcf below the five-year average of 2,054 Bcf.
While the reported inventory draw was on the high end of the range of estimates coming into the day and well above the 7-Bcf year-ago drawdown, it was well below the 118-Bcf five-year-average pull. Warmer weather that sapped heating demand is seen to have encouraged the week's storage withdrawal.
"Next week's report is likely to show a below normal injection level as the weather has been mild for most of this week in the main natural gas consuming regions of the country," Energy Management Institute Principal Dominick Chirichella said.
Demand/supply data toward the close of February support the preliminary projection for the next inventory data, with the EIA's latest "Natural Gas Weekly Update" for the week to Feb. 28 showing total U.S. gas consumption flat week over week at 75.0 Bcf/d but dry production up 1% over the same period at 78.5 Bcf/d.
Although power burn was higher during the week in review, residential/commercial-sector demand was lower and industrial-sector consumption was flat. The report week was the second consecutive week that well-above-average temperatures prevailed in the eastern U.S., according to the EIA.
Further out, below-average temperatures already associated with higher low temperatures as winter transitions to spring begin to loosen grip across the major heat-consuming regions heading into mid-March, suggesting additional downside pressure on lingering natural gas demand for heating that would drive down the amount of natural gas drawn from underground storage.
Updated National Weather Service projections show below-average temperatures holding over the Northwest, a majority of the Midwest, bulk of the mid-Atlantic, the entire Southeast and about half of the Gulf Coast in the six- to 10-day period, but shifting and shrinking in scope 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, remainder of the Gulf Coast and Southwest in the shorter-range view expand in the longer range to overtake most of the country's eastern two-thirds and much of the Rockies.
A continuation of a slower-than-normal rate of weekly storage draws in the weeks ahead should allow more natural gas to remain in storage than previously expected. The EIA currently sees overall inventories reaching the second-lowest end-of-season level since 2010 at 1,330 Bcf on March 31, assuming storage draws matching the five-year average for the remainder of the withdrawal season.
Natural gas booked Thursday for Friday flow had a mixed showing amid diverging demand expectations.
Looking at the key delivery locations, roughly 1-cent gains on average took benchmark Henry Hub and Chicago day-ahead gas prices to indexes at $2.670/MMBtu and $2.409/MMBtu, respectively. By contrast, Transco Zone 6 NY cash gas pricing logged an almost 4-cent reduction in deals averaging at $2.716/MMBtu, as PG&E Gate hub activity held near unchanged day on day at an index at $2.761/MMBtu.

Regionally, Gulf Coast next-day gas price action tacked on about 3 cents on the session to average at $2.541/MMBtu, as Midwest spot gas pricing notched a roughly 1-cent slump in trades averaging at $2.306/MMBtu. Northeast cash gas prices were up near 11 cents on average to an index at $2.508/MMBtu, while West Coast day-ahead gas price activity was almost flat at an index at $2.197/MMBtu.

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