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April natural gas futures search for direction overnight

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April natural gas futures search for direction overnight

After a marginal 0.3-cent loss in its first day in the lead slot Tuesday to settle at $2.683/MMBtu, NYMEX April natural gas futures moved on either side of the ledger overnight ahead of the Wednesday, Feb. 28, open, as lingering cold in weather outlooks suggest some late-season heating demand, while seasonal changes drive uncertainty in the market. At 7:05 a.m. ET, the contract was 0.3 cent higher at $2.686/MMBtu while trading a range from $2.659/MMBtu to $2.698/MMBtu.

Below-average temperatures dominate in the revised National Weather Service forecasts, gripping almost the entire West, parts of the Midwest, the lower tier of the Mid-Atlantic and most of the South in the six- to 10-day period, then recede from the Southwest but remain prevalent across the West and spill into more of the Midwest, Mid-Atlantic and South in the eight- to 14-day period.

Average to above-average temperatures span the Northeast, the balance of the Mid-Atlantic, the remainder of the Midwest, a few parts of the South and the remainder of the West through both periods.

Although the transition from winter to spring suggests higher low temperatures, colder weather in store could still inspire residual heating demand that would encourage storage withdrawals.

Natural gas inventories were at 1,760 Bcf, or 609 Bcf below the prior-year level and 412 Bcf below the five-year average of 2,172 Bcf, after the U.S. Energy Information Administration reported a 124-Bcf drawdown in the week ended Feb. 16.

Warmer weather that helped trim natural gas consumption in the subsequent days is expected to have encouraged a step lower in the rate of weekly storage draws to the 70s Bcf in the next inventory data that will cover the week ended Feb. 23, which would compare to a 118-Bcf five-year-average withdrawal and a 7-Bcf year-ago pull.

Further out, early estimates call for withdrawals in the lower 80s Bcf that would initially trail five-year average pulls of 129 Bcf for the week to March 2 and 97 Bcf for the week to March 9 but outperform the 53-Bcf five-year-average draw in the week to March 16.

The EIA currently sees total natural gas inventories ending the traditional withdrawal season at 1,290 Bcf on March 31, which is 24% lower than the five-year average and the second lowest end-of-season level reported since 2010, with net storage draws matching the five-year average for the balance of the season.

The price of next-day natural gas unraveled in much of the country Tuesday on the back of mostly softer demand projections.

Among the key hubs, Transco Zone 6 NY day-ahead gas prices led the charge lower with an 11-cent retreat on average to an index at $2.540/MMBtu. PG&E Gate cash gas price action followed with a near 10-cent slump in deals averaging at $2.716/MMBtu, then Chicago hub activity that shed approximately 6 cents on the day to average $2.357/MMBtu and benchmark Henry Hub spot gas pricing that eased by about 1 cent to an index at $2.589/MMBtu.

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In regional terms, Northeast and West Coast next-day gas prices fell by around 8 cents on average to indexes at $2.370/MMBtu and $2.184/MMBtu, respectively. Midwest day-ahead gas pricing slipped by roughly 7 cents to an index at $2.262/MMBtu, as Gulf Coast cash gas price activity gave back almost 2 cents on the session to average at $2.478/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 and natural gas index prices, as well as forwards and futures, visit our Commodities pages.