After settling a scant 0.1 cent lower at $3.190/MMBtu ahead of the weekend, NYMEX May natural gas futures were higher overnight leading up to the Monday, April 3, open, as the re-appearance of cooler weather over key demand centers in forecasts looked to drive residual heating load in the coming weeks. Changing hands from $3.211/MMBtu to $3.229/MMBtu, the contract was 2.7 cents higher at $3.217/MMBtu at 7:13 a.m. ET (1113 GMT).
The heating season reached its titular end on March 31, but the latest weather outlooks suggest lingering heating demand through early April amid returning cool conditions over the Midwest.
The National Weather Service sees above-average temperatures enveloping nearly the entire eastern two-thirds of the U.S. in the upcoming six- to 10-day period but shrinking in scope over the central U.S. to be confined to portions of the Gulf Coast further out to the eight- to 14-day period, as below-average temperatures forecast to be confined to a majority of the West and Florida in the near term spill onto parts of the Midwest and Gulf Coast in the longer-range view. Average temperatures contained to a narrow band along the Rockies and a small patch of the Southeast in the shorter-range period expand in scope further out to settle over parts of the West Coast and a large section of the central U.S.
The longer-range weather projection should feed support for heating demand that would limit the amount of natural gas available to be moved into underground storage facilities, as market participants begin to consider a changeover from weekly storage withdrawals to injections.
The net 43-Bcf drawdown reported by the U.S. Energy Information Administration in its latest storage data for the week ended March 24 is expected to have been the final storage draw of the withdrawal season. That took total working gas stocks to 2,049 Bcf, or 423 Bcf below the year-ago level and 250 Bcf above the five-year average of 1,799 Bcf.
For the next weekly storage report due out on April 6, traders and analysts anticipate a build to inventories for the review week to March 31, when demand is seen to have deflated amid moderating weather.
The EIA's latest "Natural Gas Weekly Update" for the week ended March 29, much of which will be reflected in the forthcoming storage data, show total U.S. gas consumption notching a 10% decline week on week, driven by a 22% drop in residential/commercial-sector demand as temperatures moderated from the recent cold snap.
At the cash markets, traders moved a revised natural gas offering on March 31 for Saturday-through-Monday flow at mixed but mostly higher values, as demand expectations remained supportive despite the weekend inclusion in the altered package.
Looking at the key delivery locations, a 5-cent increase took benchmark Henry Hub spot gas price activity to an index at $3.132/MMBtu, as a better-than-1-cent uptick nudged PG&E Gate next-day gas pricing to an average at $3.221/MMBtu. Conversely, an almost 7-cent decline steered Chicago hub action to an index at $2.945/MMBtu, as a better-than-5-cent slump drove Transco Zone 6 NY cash gas pricing to an average at $2.876/MMBtu.
In regional terms, Gulf Coast day-ahead gas price action notched a scant less-than-1-cent gain in deals averaging at $2.982/MMBtu, as West Coast spot gas prices advanced by roughly 3 cents on average to an index at $2.629/MMBtu. Midwest cash gas pricing climbed by 4 cents to an index at $2.858/MMBtu, as Northeast next-day gas price activity added near 9 cents on the session to average at $3.248/MMBtu.
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