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March natural gas ends seesaw session slightly negative amid uncertainty

Natural gas futures for March seesawed through the Wednesday, Feb. 14, trading session searching for direction ahead of what is expected to be a supportive storage withdrawal report from the U.S. Energy Information Administration, but with varied weather outlooks. Spanning $2.553/MMBtu to $2.623/MMBtu, the contract ended the midweek session 0.7 cent lower at $2.587/MMBtu.

The natural gas inventory report to be released at 10:30 a.m. ET on Feb. 15 is expected to show a storage withdrawal above the year-ago and five-year-average levels.

Market analysts and experts surveyed are calling for a storage withdrawal for the week to Feb. 9 from 174 Bcf to 183 Bcf, with a consensus pegged at a 180-Bcf pull. The latest figure will compare to the 120-Bcf year-ago withdrawal and the 154-Bcf five-year average pull.

Natural gas inventories currently sit at 2,078 Bcf, or 503 Bcf below the year-ago level and 393 Bcf below the five-year average storage level of 2,471 Bcf, after a 119-Bcf pull reported for the week to Feb. 2.

A withdrawal at consensus this week would drive the total working gas inventory to 1,898 Bcf, widening the year-on-year deficit to 563 Bcf and extending the year-on-five-year average deficit to 419 Bcf.

Cold weather is expected to have contributed to the anticipated ramp-up in the rate of storage withdrawals, as degree day data from the National Oceanic and Atmospheric Administration for the review week ended Feb. 10 shows heating degree days were 22.0% more than normal for the period.

Midrange weather forecasts that imply a return to smaller withdrawals in the weeks ahead support downside pressure that ultimately won the day.

The latest weather maps for the six- to 10-day and eight- to 14-day periods show above-average temperatures reaching across nearly the entire eastern half of the country. A band of average temperatures separates the heat from the below-average temperatures forecast for the western half of the country.

"Short-sellers continue to bet that the winter heating season will end on a bearish note as weather forecasts continue to point toward milder temperatures heading into March," FX Empire analyst James Hyerczyk said.

Any gains in natural gas futures are likely the result of positioning ahead of the storage report, while additional upside is possible but would take a shift in the weather and a surprise in the EIA report to drive prices back to a major retracement zone at $2.899/MMBtu to $2.984/MMBtu, the analysts said.

Weather could turn supportive in the longer range as the National Weather Service outlook for early March shows a pattern of cold air that could boost heating demand anew and accelerate the pace of withdrawals leading up to the end of titular withdrawal season March 31.

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, natural gas index prices, as well as forwards and futures, visit our Commodities pages.