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June natural gas retreats overnight in profit taking

Editor's Note: Please be advised that S&P Global Market Intelligence will no longer publish daily articles on price trends in the U.S. natural gas, electricity and emissions markets beginning June 1, 2018. Pricing data for these energy markets will continue to be available on the Market Intelligence platform.

After ending the week's opening session with a 3.6-cent gain at $2.842/MMBtu, NYMEX June natural gas futures slipped in profit taking overnight ahead of the Tuesday, May 15, open. At 6:45 a.m. ET (1045 GMT) the contract was 0.7 cent lower at $2.835/MMBtu.

Natural gas inventories continue to rebuild, as the U.S. Energy Information Administration's latest storage data outlined a robust 89-Bcf injection for the week ended May 4 that matched consensus estimates coming into the day and bested both the 75-Bcf five-year-average addition and the 49-Bcf prior-year build.

Total working gas stocks currently sit at 1,432 Bcf, still 863 Bcf below the year-ago level and 520 Bcf below the five-year average of 1,952 Bcf.

Lingering storage deficits are feeding bullish sentiments in the market, but a steadily rising rig count implying growth in production has kept downside risks viable. The combined oil and natural gas rig count in the U.S. was up 13 in the week to May 11 to 1,045, according to the latest North American Rotary Rig Count.

Adding to the uncertainty, recent and projected warm weather suggests destruction of heating demand but also the building of cooling load, which should have a mixed impact on the rate of subsequent storage injections.

Warmer weather during week ended May 9 drove a 14% increase in power burn week on week but also a 37% drop in residential/commercial-sector demand, according to the EIA's latest "Natural Gas Weekly Update." Total U.S. gas consumption was down 4% on the week.

Additional warm weather is in store in the coming weeks and months. Midrange National Weather Service outlooks reflect above-average temperatures over nearly the entire country through both the upcoming six- to 10-day and eight- to 14-day periods, while the longer-range projection from AccuWeather call for warmer-than-normal weather over a large part of the U.S. for April through June.

The price of natural gas moved Monday for Tuesday flow was higher in much of the country, in line with futures.

Among the key hubs, PG&E Gate next-day gas prices led the uptrend with a 21-cent increase on average to an index at $2.913/MMBtu. Chicago spot gas price action followed with a roughly 16-cent advance to an index at $2.531/MMBtu, then benchmark Henry Hub cash gas price activity that tacked on about 9 cents on the day to average at $2.842/MMBtu. Bucking the broad uptick, Transco Zone 6 NY hub pricing logged an almost 2-cent reduction in deals averaging at $2.468/MMBtu.

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Regionally, near 13-cent gains on average steered day-ahead gas prices to indexes at $1.744/MMBtu on the West Coast, at $2.469/MMBtu in the Midwest and at $2.350/MMBtu in the Northeast. Meanwhile, an approximately 7-cent increase brought Gulf Coast spot gas pricing to an index at $2.732/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.