Following a 1.2-cent uptick in the prior session, NYMEX March natural gas futures were near unchanged overnight ahead of the Wednesday, Feb. 7, open, as technical buying collided with fundamental pressure. At 6:44 a.m. ET, the contract was 0.6 cent higher at $2.765/MMBtu.
Market participants anticipate a continuation of the slow pace of storage erosion when the U.S. Energy Information Administration releases its weekly inventory report at 10:30 a.m. ET on Thursday. Estimates for the storage data, which will cover the week ended Feb. 2, call for a withdrawal in the upper 110s Bcf to the low 120s Bcf, which would be below both the 142-Bcf year-ago pull and the 151-Bcf five-year-average drawdown.
Generally warmer weather in the week ended Jan. 31, much of which will be included in the next storage report, drove a 2% decline in total U.S. gas consumption compared to the week ago, according to the EIA's latest "Natural Gas Weekly Update."
The week's data will follow a modest 99-Bcf drawdown reported for the week to Jan. 26 that trailed the 160-Bcf five-year average withdrawal, even as it bested the 92-Bcf year-ago draw. Total working gas stocks sit at 2,197 Bcf, or 526 Bcf below the year-ago level and 425 Bcf below the five-year average of 2,622 Bcf.
Additional warming in the weeks ahead suggest ongoing demand weakness, which should allow for more natural gas to remain in underground storage facilities as it keeps a lid on the rate of weekly stock draws.
In its latest projections, the National Weather Service sees above-average temperatures encompassing a majority of the eastern U.S., much of the Southwest and a few parts of the Gulf Coast in the six- to 10-day period, before overtaking the bulk of the country in the eight- to 14-day period. Average temperatures hold over most of the central U.S. and a large section of the West in the shorter-range view, but shrink in scope to be contained to the Midwest and parts of the Northwest in the extended period. Below-average temperatures are called only for a patch of the west-north-central U.S. through both periods.
Diminished weather-related demand prospects feed the anticipation of an end-of-season storage level that is healthier than previously expected. Following the 288-Bcf draw for the week to Jan. 19 that tied the second-highest net withdrawal ever reported, the EIA said that storage withdrawals matching the five-year average for the remainder of the heating season look to leave total working gas stocks at 1,216 Bcf on March 31, or 29% lower than the five-year average.
Price action for day-ahead natural gas was mixed but predominantly higher Feb. 6, as varied demand outlooks combined with rising futures.
Regionally, Northeast spot gas price activity tacked on almost 22 cents to average at $3.540/MMBtu, as West Coast next-day gas pricing notched a near 12-cent increase in trades averaging $2.077/MMBtu. Midwest cash gas price action advanced by about 2 cents to an index at $2.576/MMBtu. Bucking the wider regional uptrend, Gulf Coast day-ahead gas prices faltered by around 2 cents on average to an index at $2.680/MMBtu.

Losses prevailed among the key hubs, however. Cash gas pricing at Transco Zone 6 NY tumbled by roughly 50 cents to an index at $2.990/MMBtu, while day-ahead gas price activity at PG&E Gate picked up almost 5 cents to average at $2.526/MMBtu. Chicago next-day gas prices slipped by nearly 5 cents to an index at $2.687/MMBtu, as benchmark Henry Hub spot gas price action logged an approximately 11-cent decline in deals averaging $2.747/MMBtu.

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