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May natural gas extends higher as cold lingers in forecasts

Followinga 4.2-cent gain in the week's opening session to a settle at $1.998/MMBtu, Maynatural gas futures continued to tack on value overnight ahead of the Tuesday,April 5, open amid ongoing weather support, as forecasts for stubborn coldacross major demand centers during what is typically the onset of the shoulderseason fuel anticipation of lingering heating demand that should allow for aslow start to the injection season. The front-month contracttracked to a $2.023/MMBtu high, and was last at $2.021/MMBtu, 2.3 cents higheron the day.

Theupdated National Weather Service forecast map for the six- to 10-day periodreflects below-average temperatures across a majority of the country's easterntwo-thirds, accompanied by average temperatures over a few areas of the centralU.S., a narrow band in the South and a large section of the West. Above-averagetemperatures are indicated for bulk of the Gulf Coast, Florida, much of theNorthwest and portions of California, Nevada and Utah.

Below-averagetemperatures recede from portions of the Eastern Seaboard and central U.S. butremain dominant in the East and overtake a patch of the Southwest in the eight-to 14-day outlook. Above-average temperatures shrink from the interior of theGulf Coast but linger over the fringes of the region and spread over thecoastal borders of the Southeast, Mid-Atlantic and Northeast, while alsoexpanding in scope in the West to encompass nearly all of the Northwest andmore of California. Average temperatures settle over the balance of the country.

Persistentcold in outlooks despite the arrival the spring shoulder season signals supportfor heating demand that is expected to impact the transition from thewithdrawal season to the injection season.

Althoughmarket participants anticipate a build to stocks in the forthcoming inventoryreport from the U.S. Energy Information Administration due out on Thursday,April 7, that will cover the final week of the titular withdrawal season,weather-driven demand support in the subsequent week is expected to allow for abrief return to storage drawdowns before the onset of steady injections throughthe balance of the spring season.

Followinga net 25-Bcf pullfrom stocks reported for the week to March 25, traders and analysts are lookingat a storage injection of anywhere from 6 Bcf to 13 Bcf for the forthcominginventory data for the week to April 1 that is expected to have been impactedby mild weather that sapped demand.

Astorage addition within the range of estimates will augment inventoriescurrently sitting at 2,468 Bcf, or 1,002 Bcf above the year-ago level and 843Bcf above the five-year average of 1,625 Bcf.

Furtherahead, however, moderating weather conditions associated with spring shouldease residual heating demand ahead of the onset of cooling load, therebyfeeding into the supply-demand imbalance that is keeping downside risks intactin the market, as inventories remain robust. Bears are expected to maintaincontrol until demand climbs and production slows to a point that inventoriesare worn down and the market regains some balance.

Incash activity, the price of natural gas moved Monday for Tuesday flowpredominantly favored the upside, as returning cold across major portions ofthe country looked to boost demand.

Acrossthe major delivery locations, the charge higher was led by Transco Zone 6 NYspot gas price action that notched a better-than-32-cent gain in dealsaveraging at $2.004/MMBtu. Chicago next-day gas price activity followed with an11-cent advance to an index at $2.037/MMBtu, as did PG&E Gate and benchmarkHenry Hub cash gas pricing that rose by about 8 cents on average to indexes at$1.930/MMBtu and $1.956/MMBtu, respectively.

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Inregional terms, Northeast day-ahead gas price activity added about $1.01 intrading to average at $2.840/MMBtu, as Midwest cash gas pricing tacked onroughly 10 cents in transactions averaging at $1.862/MMBtu. Meanwhile, WestCoast and Gulf Coast spot gas price action was lifted by about 8 cents onaverage to indexes at $1.606/MMBtu and $1.867/MMBtu, respectively.

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Marketprices and included industry data are current as of the time of publication andare subject to change. For more detailed market data, including power andnatural gasindex prices, as well as forwards and futures, visitour Commodities Pages.