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March natural gas futures slide ahead of storage report

After slipping 0.7 cent to settle at $2.587/MMBtu in the prior session, NYMEX March natural gas futures attempted gains overnight only to resume the retreat ahead of the Thursday, Feb. 15, open, despite the midmorning release of the storage data poised to show a ramped-up rate of weekly stock withdrawals. At 7:30 a.m. ET, the contract was 3.2 cents lower at $2.555/MMBtu.

Weather that generated heating degree days in the week to Feb. 10 that were 22.0% more than in the prior year and 0.5% more than normal, according to degree day data from the National Oceanic and Atmospheric Administration, is expected to have driven a large drawdown from inventories when the next weekly storage report is released at 10:30 a.m. ET on Thursday.

Market participants are looking at a withdrawal from stocks ranging from 174 Bcf to 183 Bcf for the forthcoming inventory data that will cover the week ended Feb. 9, with consensus formed at a 180-Bcf draw. That would compare to a 120-Bcf year-ago pull and the 154-Bcf five-year-average drawdown.

The week's data would signal a step higher in the rate of weekly storage draws as it would come on the heels of a 119-Bcf pull in the week to Feb. 2 that took total working gas stocks to 2,078 Bcf, or 503 Bcf below the year-ago level and 393 Bcf below the five-year average of 2,471 Bcf.

A storage draw at consensus would leave overall inventories at 1,898 Bcf, expanding the year-on-year deficit to 563 Bcf and the year-on-five-year-average deficit to 419 Bcf.

A warming trend across the central and eastern U.S. in the midrange suggests renewed demand weakness in the weeks ahead likely to slow the pace of storage erosion, but changing forecasts further out suggest returning demand support.

In its latest projections, the National Weather Service, or NWS, sees above-average temperatures spanning nearly the entire eastern third of the country and the bulk of the Gulf Coast into parts of New Mexico in the six- to 10-day period, before overtaking almost all of the central and eastern U.S. into slightly more of the southern Rockies in the eight- to 14-day period. Below-average temperatures initially span most of the West and west-north-central U.S., but eventually shrink in scope to be contained to less but still a majority of the West. Average temperatures stretch over a few portions of the Midwest into the southern Rockies to separate the extremes.

Into early March, however, the weather service sees a pattern of cold air that could drive up heating demand anew and accelerate the pace of storage withdrawals leading up to the end of the titular withdrawal season on March 31.

The price of next-day natural gas was generally tethered to the downside Wednesday amid pressure from the anticipation of diminished demand.

Among the major delivery locations, Transco Zone 6 NY cash gas prices led the downtrend with a roughly 16-cent decline on average to an index at $2.397/MMBtu. Benchmark Henry Hub day-ahead gas price action followed with an approximately 4-cent reduction in trades averaging at $2.533/MMBtu, then Chicago hub activity that shed 2 cents on the day to average at $2.437/MMBtu. Defying the broad retreat, PG&E Gate spot gas pricing advanced by almost 3 cents to an index at $2.790/MMBtu.

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In regional terms, Northeast next-day gas price activity unraveled around 22 cents on the session to average at $2.367/MMBtu, as Gulf Coast cash gas pricing logged a near 9-cent slump in transactions averaging at $2.424/MMBtu. Midwest spot gas price action faltered by 7 cents to an index at $2.304/MMBtu, while West Coast day-ahead gas prices eased by 4 cents on average to an index at $2.306/MMBtu.

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Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power and natural gas index prices, as well as forwards and futures, visit our Commodities pages.