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May gas extends recent losses amid ample supply, thinner demand

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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021

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Essential Energy Insights - January 2021


May gas extends recent losses amid ample supply, thinner demand

Afterlosing 2.8 cents inthe prior session, front-month May natural gas futures extended lower Monday,April 11. The contract moved from $1.907/MMBtu to $1.951/MMBtu before settlingthe day at $1.912/MMBtu, down another 7.8 cents on profit taking, as revisedweather outlooks indicate widespread warming, which should translate into thindemand against a backdrop of very ample supply.

TheU.S. Energy Information Administration reported a net 12-Bcf injection to storage for the week ended April1, leaving total natural gas storage at a fresh end-of-season record high of2,480 Bcf, which is 1,008 Bcf above the year-ago level and 874 Bcf above thefive-year average of 1,606 Bcf.

Estimatesfor the next storage report to be released April 14 by the EIA are calling foranywhere from a withdrawal of 13 Bcf to an injection of 10 Bcf. The figure willcompare to a five-year average injection of 22 Bcf and a 49-Bcf addition recordedduring the same week in 2015.

Lookingat the weather in the near-term, the National Weather Service forecast map forthe six- to 10-day period is calling for above-average temperatures acrossnearly all of the country's northern tier, much of the Southwest and Florida.Below-average temperatures are projected for the southern Rockies and abouthalf of the Gulf Coast, while average temperatures are anticipated for theSoutheast and the remainder of the Gulf Coast.

Inthe eight- to 14-day outlook, above-average temperatures are expected toenvelop a large portion of the country, with average conditions expected acrossmuch of Texas in the extended period.

Themove to warmer weather should deflate lingering heating demand ahead of theonset of significant cooling load as the spring shoulder season continues tounfold, allowing for natural gas to flow more freely into underground storagefacilities and thereby encouraging the shift from weekly storage withdrawals toa steady stream of inventory injections in the weeks ahead.

Most next-day gas marketsopen week to downside

Amidthe ongoing decline in futures, next-day natural gas prices eased at most ofthe major consuming hubs around the U.S. in the week's opening session. Valuesretreated 5 cents to 20 cents on average on the session.

Inthe Northeast, day-ahead gas at Iroquois-Waddington was priced at an averagenear $2.00, down about 25 cents. To the south, product at Transco Zone 6 NY sawan index at about $1.70, easing about a penny on the day. In the mid-Atlantic,gas at Tetco-M3 posted an average at $1.65, up more than 5 cents.

Withthe losses in gas futures, day-ahead gas at the benchmark Henry Hub market inLouisiana posted an index approaching $1.90, down about 10 cents. Elsewhere inthe producing region, gas at FGT Zone 3 saw an average at about $1.85, down 5cents on the day.

Inthe Midwest, gas at Chicago saw an index at about $1.90, losing about 10 cents.Gas at NNG Demarc was assessed at an index atop $1.85, dropping more than 10cents.

Onthe West Coast, in line with the recent softness in futures, next-day gasprices faltered to start the new business week. Product at PG&E in thenorth was assessed at an average right around $1.90, declining 3 cents or so onthe day. To the south, gas at the SoCal border was quoted near an index of$1.75, decreasing about 5 cents on the session.

Market prices and includedindustry data are current as of the time of publication and are subject tochange. For more detailed market data, including our power,naturalgas and coalindex prices, as well as forwardsand futures,visit our Commodities Pages. To view detailed EIA Weekly Natural Gas Storagedata, go to our Natural GasStorage Page.