Afterretreating by 4.4 cents in the prior session to a close at $1.954/MMBtu, Maynatural gas futures continued lower overnight ahead of the Wednesday, April 6,open, as traders consider signs of breakdown in the recent weather supportalongside expectations for inventories to end the titular withdrawal season ata fresh record high. The contract fell to a $1.921/MMBtu overnightlow and was last traded at $1.923/MMBtu, down 3.1 cents on the session.
The latestweather maps show below-average temperature readings shrinking in scope in theperiod through mid-April, which should soften lingering heating demand andprovide a respite ahead of the onset of strong cooling demand as springtransitions into summer.
Therevised National Weather Service forecast for the six- to 10-day period showsbelow-average temperatures holding over a majority of the country's easterntwo-thirds and a portion of the Southwest, as above-average temperatures lingerover a large area of the West, the lower tier of the Gulf Coast and in Florida.Average temperatures are indicated for the balance of the West, the fringes ofthe Midwest, parts of the Gulf Coast and a narrow band along the Southeast.
Below-averagetemperatures shrink in scope in the East to be contained to the lower half ofthe Northeast, much of the Mid-Atlantic and east-north-central U.S., but expandin the Southwest to encompass the bulk of the region in the eight- to 14-dayoutlook. Above-average temperatures span much of the Northwest, portions of thewest-north-central U.S., most of the Gulf Coast and the fringes of theSoutheast, as average temperatures linger elsewhere in the country.
Alack of significant demand absent weather support through the spring shoulder seasonis expected to encourage inventories to challenge storage capacity limits goingforward, as stocks are poised to enter the storage rebuilding season at a levelexceeding the previous record high.
Totalworking natural gas in storage currently sits at 2,468 Bcf, or 1,002 Bcf abovethe year-ago level and 843 Bcf above the five-year average of 1,625 Bcf, afterthe U.S. Energy Information Administration reported a net for the week to March25.
Inventoriesare poised to beat the record-high end-of-season storage of 2,473 Bcf reached March31, 2012, when the final storage figure for the titular withdrawal season isreleased at 10:30 a.m. ET on Thursday, April 7, as market participants see apossible injection to stocks.
Estimatesfor the forthcoming inventory report that will cover the week to April 1 callfor a storage build of as little as 1 Bcf to as much as 15 Bcf, with consensusformed at a 9-Bcf addition to stocks. This will compare against a 19-Bcffive-year-average withdrawal and a 6-Bcf build seen in the corresponding weekin 2015.
Astorage injection at the average anticipated level would drive inventories to2,477 Bcf, widening the year-on-five-year average surplus to 871 Bcf and theyear-on-year overhang to 1,005 Bcf.
Incash activity, the natural gas offering Tuesday for Wednesday flow was bookedat diminished values in much of the country, as vacating cold that fedanticipation of softer demand conspired with a downdraft at the futures complex.
Acrossthe major delivery locations, an 8-cent decline took Chicago day-ahead gaspricing to an index at $1.957/MMBtu, as a 4-cent slump drove benchmark HenryHub spot gas price action to an average at $1.916/MMBtu and a near 1-centreduction goosed PG&E Gate cash gas price activity to an index at$1.924/MMBtu. Defying the downtrend, an uptick of almost 13 cents on averagesteered Transco Zone 6 NY hub prices to an index at $2.130/MMBtu.
Regionalaverages were mixed but mostly lower. Next-day gas price activity in theMidwest unraveled by roughly 2 cents to average at $1.844/MMBtu, as cash gasprice action in the Gulf producing region deflated by about 4 cents in dealsaveraging at $1.829/MMBtu. Spot gas prices on the West Coast ran against thewider decline with a near 2-cent advance on average to an index at$1.628/MMBtu, as day-ahead gas pricing across the Northeast fell by more than37 cents on the session to an index at $2.467/MMBtu.
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