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April natural gas moves near unchanged overnight

Following a finish 3.7 cents lower at $2.651/MMBtu, April natural gas futures on the New York Mercantile Exchange traded on either side of unchanged, managing to drift onto the plus side of the ledger ahead of the Tuesday, March 20, open. At 7:10 a.m. ET, the contract was 0.5 cent higher at $2.656/MMBtu, while trading a range from $2.650/MMBtu to $2.667/MMBtu.

While participants are eyeing weather outlooks and anticipated warmth as spring officially begins at 12:15 p.m. ET on March 20, cold weather in the midrange period continues to drive modest upside support amid lingering demand that should keep natural gas inventories eroding.

The latest six- to 10-day weather map from the National Weather Service shows below-average temperatures in the Northeast and a portion of the mid-Atlantic and expanding from the West to encompass a portion of the north central U.S. Average temperatures grip portion of the mid-Atlantic, Southeast, Midwest and central U.S., while portions of the Southeast, the Gulf and areas of the south-central U.S. will see above-average temperatures.

For the eight- to 14-day period below-average temperatures grip a portion of the Northeast as well as portions of the central and West, while the majority of the eastern half of the country, along with the West Coast will see a mix of average and above-average temperatures.

As spring takes hold, the National Oceanic and Atmospheric Administration is projecting warmer-than-normal weather for much of the country from April through June, with the exception of the Pacific Northwest and north-central U.S., which generally should see equal chances of below-average, normal or above-average temperatures through the three months.

Amid the warming, weekly storage reports should turn from outlining withdrawals to injections as milder weather saps demand for heating ahead of a bump up in cooling demand.

Providing the upside support however, the market will have to contend with the implications of the current and midrange cold as storage withdrawals are expected to continue.

Natural gas inventories fell 93 Bcf in the week to March 9, a step above the 57-Bcf pull reported the previous week and above the 55-Bcf year-ago withdrawal, but below both the full range of estimates ahead of the report's March 15 release and the 97-Bcf five-year average.

With colder conditions in many parts of the Lower 48, total U.S. consumption of natural gas rose by 5% in the review week to March 14 compared with the previous report week, according to the EIA. The demand boost is feeding outlooks for a mid-90s Bcf withdrawal from stocks for the week to March 16 that will compare with a 137-Bcf pull reported for the corresponding week in 2017 and the 53-Bcf five-year average draw.

If net withdrawals from working gas stocks match the five-year average for the remainder of the withdrawal season, working gas stocks will total 1,406 Bcf by March 31, considered the traditional end of the season. That would be 17% lower than the five-year average.

Working gas stocks ended the 2013-14 heating season at 837 Bcf, which is the lowest reported level for that time since 2010.

In day-ahead trade prices were pushed higher by weather, as cold stoked demand expectations.

At the mjaor hubs, Transco Zone 6 NY led the upside with a gain of 6.5 cents to an index at $2.879/MMBtu, Henry Hub followed with a 5.6-cent gain to an index at $2.680/MMBtu, Chicago added 4.1 cents to $2.490/MMBtu and PG&E Gate gained 2.2 cents to an index at $2.681/MMBtu.

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On a regional basis, the Northeast added 27.6 cents to an index at $3.059/MMBtu, the Midcontinent added 9.7 cents to an index at $2.347/MMBtu, the Gulf Coast saw an average gain of 3.9 cents to an index at $2.593/MMBtu and the West region added 6.7 cents on average to an index at $1.987/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, natural gas index prices, as well as forwards and futures, visit our Commodities pages.