After extending 9.9 cents lower in the week's opening session, NYMEX March natural gas futures ticked higher overnight ahead of the Tuesday, Feb. 6, open, in technical buying with little in the way of fundamental support. At 7:01 a.m. ET, the contract was 0.7 cent higher at $2.754/MMBtu.
March gas has notched a cumulative loss of 44.8 cents after steadily declining for four consecutive sessions from Jan. 31 to Feb. 5, but sentiment of oversold conditions was driving renewed buying momentum despite fundamental pressures coming from weather and natural gas inventories.
Weather that trimmed heating demand is seen to have kept a lid on the rate of weekly storage withdrawals in the most recent inventory report week ended Jan. 26, for which the U.S. Energy Information Administration outlined a 99-Bcf drawdown that trailed consensus estimates and the 160-Bcf five-year average pull, even as it bested the 92-Bcf year-ago draw. That took total working gas stocks to 2,197 Bcf, or 526 Bcf below the year-ago level and 425 Bcf below the five-year average of 2,622 Bcf.
Warmer weather in the week ended Jan. 31, much of which will be included in the next storage report covering the week ended Feb. 2, drove a 2% decline in total U.S. gas consumption compared to a week earlier, according to the EIA's latest "Natural Gas Weekly Update," feeding expectations for a continuation of the slow pace of storage erosion. Estimates for the forthcoming storage data call for a withdrawal in the upper 110s Bcf to the low 120s Bcf, which would be below both the 142-Bcf year-ago pull and the 151-Bcf five-year-average drawdown.
Farther out, abating cold in midrange temperature outlooks should heap additional downside pressure on demand levels, likely to allow for more natural gas to remain in underground storage facilities heading toward spring.
Updated National Weather Service forecasts show below-average temperatures holding over nearly the entire Midwest, bulk of the Gulf Coast and portions of the Rockies in the six- to 10-day period but disappearing in the eight- to 14-day period.
Average temperatures initially span narrow bands along the West and East that flank the area of cold weather, but eventually replace the cold and ultimately settle over a section of the Northwest and nearly the entire central U.S. Above-average temperatures encompass much of the country's eastern third and a large area of the West through both periods.
Pulls from inventories trailing the five-year average suggest that working gas stocks will end the titular withdrawal season at a healthier level than previously expected. Following the 288-Bcf draw for the week to Jan. 19 that tied the second-highest net withdrawal ever reported, the EIA said that storage withdrawals matching the five-year average for the remainder of the heating season look to leave total working gas stocks at 1,216 Bcf on March 31, or 29% lower than the five-year average.
Price action for next-day natural gas was choppy Feb. 5, as market participants considered varied weather-related demand prospects.
Looking at the key delivery locations, a roughly 97-cent decline steered Transco Zone 6 NY cash gas price activity to an index at $3.486/MMBtu, as a near 6-cent reduction drove benchmark Henry Hub day-ahead gas pricing to an average at $2.853/MMBtu and an almost 3-cent slump took Chicago spot gas price action to an index at $2.725/MMBtu. Conversely, a less-than-1-cent uptick nudged PG&E Gate hub pricing to an average at $2.480/MMBtu.

Regionally, Northeast spot gas price action logged a near 70-cent decrease in trades averaging at $3.323/MMBtu, as Gulf Coast next-day gas price activity unraveled about 10 cents on the session to average at $2.704/MMBtu. Conversely, Midwest day-ahead gas pricing advanced by near 2 cents to an index at $2.560/MMBtu, as West Coast cash gas prices climbed by roughly 6 cents on average to an index at $1.961/MMBtu.

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