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May natural gas futures turn higher ahead of storage data


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May natural gas futures turn higher ahead of storage data

After closing 1.6 cents lower at $2.698/MMBtu in its debut in the lead slot, May natural gas futures turned higher overnight ahead of the Thursday, March 29, open, and the midmorning release of the next slate of storage data. At 7:15 a.m. ET (1115 GMT) the contract was up 3.8 cents at $2.736/MMBtu.

Analysts and traders looking to the storage report due out at 10:30 a.m. ET that will cover the week to March 23, expect a storage pull from 65 Bcf to 80 Bcf with a consensus formed at a 72-Bcf withdrawal from stocks as lingering cold weather is expected to have kept demand elevated. The pull will compare with the 46-Bcf five-year average pull and the 58-Bcf drawdown reported for the same week in 2017.

Degree day data from the National Oceanic and Atmospheric Administration supports the storage outlook as it shows for the week to March 24 there were 25.8% more heating degree days than last year and 10.2% more than normal.

A withdrawal at consensus would drive the total working gas inventory to 1,374 Bcf, and would widen the year-on-year deficit to 681 Bcf and extend the year-on-five-year-average deficit to 355 Bcf.

With an additional storage pull in the upper 20s Bcf anticipated for the week to March 30, market participants are considering end-of-season inventories forecast at 19% below the five-year average level by March 31, and the ability to refill the supply ahead of the next peak demand period.

Weather will play a key role in the market's ability to rebuild supply and while midrange forecasts suggest additional cold weather, projections for the April-June period suggest declining demand that alongside strong production outlooks should help inventories grow.

For the midrange period, the National Weather Service projects below-average temperatures over the Northeast, mid-Atlantic, Midwest, parts of the Northwest and the upper tier of the South, as average to above-average temperatures settle over much of the West and the balance of the South for the six- to 10-day and eight- to 14-day periods.

Longer-range weather outlooks for the April-June period call for warmer-than-normal weather over a large part of the U.S.

The latest rig-count data outlined a combined natural gas and oil-rig boost of five in the week to March 23 to 995 rigs, and Barclays analysts forecast natural gas production to grow 7 Bcf/d this summer compared with the previous summer to 79.5 Bcf/d.

A three-day packages covering Thursday, March 29, to Saturday, March 31, traded on March 28 to accommodate for the Good Friday and Easter Sunday holiday and the start of the fresh month. Packages traded at mixed values amid varied regional demand expectations.

Regionally, the Gulf Coast stood alone on the plus side adding a marginal 1.7 cents to an index at $2.541/MMBtu. The Northeast led in losses, sinking 8.9 cents to $2.354/MMBtu, the West shed 2.2 cents to $1.951/MMBtu and the Midcontinent was down 1.0 cent to $2.292/MMBtu.

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At the hubs, Henry Hub added 4.0 cents to an index at $2.640/MMBtu and PG&E Gate gained 1.8 cents to $2.558/MMBtu. Transco Zone 6 NY tumbled 13.0 cents to an index at $2.550/MMBtu and Chicago slipped 0.8 cent to an index at $2.395/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.