trending Market Intelligence /marketintelligence/en/news-insights/trending/tti3ezwcd5jglnhp0iftba2 content esgSubNav
In This List

Demand uncertainty limits extended decline for April natural gas futures

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


Demand uncertainty limits extended decline for April natural gas futures

April natural gas futures extended losses at midweek as the weakening demand anticipated amid the changing seasons kept pressure on values. While seesawing through Wednesday, Feb. 28, trade, in a $2.659/MMBtu to $2.710/MMBtu spread, the contract settled 1.6 cents lower at $2.667/MMBtu.

The level of demand generated by weather in the remaining weeks of winter is keeping market uncertainty palpable, as forecasts call for a return to below-average temperatures in major heat-consuming regions, while the transition from winter to spring generally means higher low temperatures.

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.

Higher low temperatures have already started to diminish demand for heating. The U.S. Energy Information Administration reported a sizable 14% week-on-week decrease in total natural gas consumption in the week to Feb. 21. Residential/commercial-sector demand was down 24% week on week largely because of warmer conditions in the eastern half of the country, the EIA said.

The lower demand will play into the storage figure for the week to Feb. 23, slated for release at 10:30 a.m. ET on Thursday, March 1.

Market analysts and experts surveyed are calling for a storage withdrawal from 60 Bcf to 82 Bcf, with a consensus pegged at a 75-Bcf pull. The latest figure will be a significant step below the 124-Bcf withdrawal reported the previous week and will compare to the 7-Bcf year-ago withdrawal and the 118-Bcf five-year average pull.

The 124-Bcf pull reported for the week ended Feb. 16 brought total U.S. working gas supply to 1,760 Bcf, or 609 Bcf below the year-ago level and 412 Bcf below the five-year average storage level of 2,172 Bcf. The pull was within the wider range of trader and analyst estimates but came in higher than a consensus expectation of 116 Bcf.

A withdrawal at this week's consensus would drive the total working gas inventory to 1,685 Bcf and would widen the year-on-year deficit to 677 Bcf, but would trim the year-on-five-year-average deficit to 369 Bcf.

According to the EIA, as long as withdrawals match the five-year averages for the next six weeks, storage will total 1,290 Bcf by the traditional end of withdrawal season on March 31, which would be 24% below the five-year average and the second lowest end of heating season level reported since 2010.

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.