Afterending the prior session up another 3.2 cents at $2.036/MMBtu, May natural gasfutures were near unchanged overnight ahead of the Thursday, April 14, open,amid conflicting fundamentals, as evidence of tightening production collideagainst the anticipation of a modest change in stocks that should leaveinventories robust when the next storage data is released at midmorning andlackluster weather-related demand support. Moving on either sideof unchanged, the contract was last traded 0.4 cent lower at $2.032/MMBtu.
Thelatest Drilling ProductivityReport from the Department of Energy that showed a 1.1% decline inU.S. shale gas production in May, suggesting that production is beginning to respondto a sharp reduction in the natural gas rig count, has driven recent gains forfutures, but the upside momentum is beginning to be challenged by bearish nearto midrange fundamentals.
Overallinventories remain elevated at a record-high level of , or 1,008 Bcf above theyear-ago level and 874 Bcf above the five-year average of 1,606 Bcf, after theU.S. Energy Information Administration outlined a net 12-Bcf injection tostocks for the week to April 1.
Marketparticipants anticipate little change in total stocks when the next weeklystorage data is released at 10:30 a.m. ET on Thursday, which should leaveinventories healthy.
for the forthcominginventory data that will cover the week to April 8 range from a 13-Bcfwithdrawal to as much as a 10-Bcf build, with consensus formed at a 1-Bcfdrawdown. This will compare against a 22-Bcf five-year-average build and a49-Bcf addition to stocks in the corresponding week in 2015.
Atconsensus, the week's data would leave total inventories at 2,479 Bcf, bringingthe year-on-year surplus to 958 Bcf and the year-on-five-year average overhangto 851 Bcf.
Returningwinter-like weather to major heat-consuming regions is seen to have drivenenough demand to foster a stock draw in the storage report week, but moderatingweather in store is expected to put an end to inventory withdrawals.
Accordingto the National Weather Service, above-average temperatures will engulf thebulk of the U.S. to leave only portions of the Eastern Seaboard and Texas inthe scope of average to below-average temperatures in the upcoming six- to10-day period, but should overtake more of the country further out to theeight- to 14-day period to push out below-average temperatures from the map andconfine average temperatures to parts of the Northeast and the southern tip ofTexas.
Warmingin the coming weeks should deflate lingering heating demand ahead of the onsetof significant cooling load as the spring shoulder season unfolds, allowing fornatural gas to flow more freely into underground storage facilities andencouraging a changeover from weekly storage withdrawals to a steady stream ofinventory injections.
Atthe cash markets, price action for natural gas moved Wednesday for Thursdayflow was choppy, as an ongoing uptick at the futures arena ran contrary to alack of weather and demand support.
Acrossthe major delivery locations, the downside was confined to Transco Zone 6 NY ashub pricing unraveled by almost 2 cents on the session to average at$1.753/MMBtu, while gains prevailed elsewhere. PG&E Gate and benchmarkHenry Hub day-ahead gas prices rose by about 3 cents on average to indexes at$1.971/MMBtu and $2.005/MMBtu, respectively, as Chicago next-day gas priceactivity advanced by roughly 2 cents to an index at $1.922/MMBtu.
Regionalaverages were thoroughly mixed. Spot gas price action in the Northeast deflatedby almost 9 cents in deals averaging at $2.114/MMBtu, as next-day gas pricingon the West Coast climbed by about 2 cents to an index at $1.666/MMBtu. Cashgas prices in the Gulf producing region also ascended by nearly 2 cents onaverage to an index at $1.866/MMBtu, as day-ahead gas price activity in theMidwest shed around 1 cent on the day to average at $1.856/MMBtu.
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.