May naturalgas futures moved back above $2/MMBtu Monday, April 4, supported by weather outlooksthat turned colder, particularly in the Northeast. The cool down is expected todrive strong demand during what is typically the onset of the shoulder season. Reachinga $2.074/MMBtu intraday and near three-month high, the front-month contract reversedthe larger gains to finish up 4.2 cents at $1.998/MMBtu.
The latestrevisions to weather maps from the National Oceanic and Atmospheric Administrationshow for the upcoming six- to 10-day period, below-average temperatures will spanfrom the majority of the eastern U.S. into portions of the central U.S. This coldshould drive natural gas demand for heating supporting current market strength astraders cover short positions, while limiting storage injections during what istypically the onset of injection season.
The mildend to winter resulted in an earlyinjection into natural gas inventories of 15 Bcf in the week ended March18 that was followed by a withdrawalof a net 25 Bcf in the week to March 25.
Thatpull was just below consensus expectations and compared against the five-year averagewithdrawal of 22 Bcf and the pull of 10 Bcf reported for the same week in 2015,and brought total U.S. working gas supply to 2,468 Bcf, or 1,002 Bcf above the year-agolevel and 843 Bcf above the five-year average storage level of 1,625 Bcf.
Earlyprojections for the report due out Thursday, April 7, and covering the week to April1, suggest injections from 6 Bcf to 13 Bcf as milder weather in the review weekis likely to have limited demand for heating or cooling. A return to withdrawalsis anticipated in the subsequent week before warming supports steady injectionsthrough the balance of the spring season.
In theeight- to 14-day weather outlook, the NOAA expects above-average temperatures tocreep across the Eastern Seaboard, overtaking Florida and spanning into coastalareas of the Gulf region. Above-average temperatures will also grip a portion ofthe West and west-central U.S. while average temperatures span from a narrow pathin the East and Gulf, into portions of the central and Southwest. Below-averagetemperatures persist in portions of the Northeast, Mid-Atlantic, Midwest, centralU.S. and Southwest.
As temperaturesrise and demand for heating eases ahead of the onset of cooling load, price supportshould weaken with the significant storage overhang serving as an albatross forthe market. Bears are expected to maintain control until demand climbs and productionslows to a point that inventories are worn down and the market regains some balance.
Winter weather returns to supportspot gas gains
Coldweather's return to major portions of the country added strength to the day-aheadmarkets in deals done for Tuesday flow.
Northeasthub values soared as traders booked product for a cold Tuesday across the region.Algonquin Citygates jumped nearly $4.45 on the session to an index near $5.80, whileIroquois-Waddington traded more than 55 cents higher to an index around $2.65. Inand outside of New York, a gain of about 30 cents at both Transco Zone 6 NY andTETCO-M3 drove indexes to around $2.00 and $1.80 at the hubs, respectively.
Gainsof between 5 cents and 10 cents were reported at the Gulf hubs with cold weatheradding support to values. Henry Hub traded to an index around $1.95, Col Gulf Mainlinefound its index near $1.85, and FGT Zone 3 averaged around $1.90. A gain of morethan 10 cents at Chicago drove the index at the Midwest location to around $2.00,while in Texas Waha added nearly 10 cents to the prior-day index, driving the averageto around $1.75. Similar gains of near 10 cents were reported at West hubs, whereSoCal Border and Malin found indexes near $1.75 and PG&E Gate found its averagenear $1.95.
Market prices and included industrydata are current as of the time of publication and are subject to change. For moredetailed market data, including our power,naturalgas and coalindex prices, as well as forwardsand futures,visit our Commodities Pages. To view detailed EIA Weekly Natural Gas Storage data,go to our NaturalGas Storage Page.