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May gas picks up value as weather suggests mix of heating, cooling demand

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May gas picks up value as weather suggests mix of heating, cooling demand

Aftera settle 0.3 cent lower at $1.956/MMBtu ahead of the weekend, May natural gasfutures were higher in overnight trading leading up to the Monday, April 4,open, as supportive weather forecasts indicating lingering cold and buildingheat that should drive ongoing heating demand and early cooling load once againreflected more on values than did pressure from hefty inventories.Trading in positive territory through the overnight session, the front-monthcontract was last up 3.1 cents at $1.987/MMBtu.

Totalworking natural gas in storage remains on a path to challenge the record-highend-of-March stock level of 2,473 Bcf reached in 2012, as inventories currentlysit at 2,468 Bcf, after the U.S. Energy Information Administration outlined anet 25-Bcf withdrawalfor the week to March 25.

Comparingagainst a 10-Bcf year-ago pull and a 22-Bcf five-year-average withdrawal, thelatest reported drawdown drove stocks to 1,002 Bcf above the level seen at thesame time in the prior year and 843 Bcf above the five-year average of 1,625Bcf.

Preliminaryestimates in advance of the next storage data due out on April 7 suggest abuild for the final week of the titular withdrawal season, as traders andanalysts anticipate a storage injection from 6 Bcf to 13 Bcf for the reviewweek to April 1, which would compare against a 19-Bcf five-year-average pulland a 6-Bcf injection reported in the corresponding week in 2015.

Yet,though robust inventories are keeping downside risks intact in the market,weather prospects fuel upside momentum, as a combination of stubborn cold inforecasts despite the calendar arrival of spring and warming across portions ofmajor demand centers signals support for a mix of heating and cooling demandthat looks to drive a brief return to storage withdrawals moving into mid-April.

Thelatest National Weather Service outlook for the six- to 10-day period showsbelow-average temperatures gripping the Northeast, Mid-Atlantic, most of theSoutheast and a majority of the Midwest, as above-average temperatures holdover much of the West, a tiny patch of the Midwest and bulk of the Gulf Coast.Average temperatures are indicated for a few parts of the West, a narrow bandalong the central U.S. and southern Florida.

Below-averagetemperatures recede from a large area of the East and shift to the country'smidsection to encompass portions of the Rockies, all of the Midwest, fewerareas of the Mid-Atlantic and the fringes of the Northeast further out to theeight- to 14-day period, as above-average temperatures shrink in scope in theWest to settle over about half of the region but linger over much of the GulfCoast and overtake most of the Southeast, as well as parts of the Mid-Atlanticand Northeast. Average temperatures stretch from a narrow swath along the East,into a small portion of the central U.S. and parts of the West.

Milderweather as the spring shoulder season continues to unfold, however, should sapdemand levels anew and encourage a steady stream of storage injections thatwould once again work total gas stocks higher, limiting the uptick in themarket.

Incash trading, price activity for natural gas booked on April 1 forSaturday-through-Monday delivery was mixed with a downside bias, as variedweather conspired with the inclusion of the low-demand weekend days in therevised offering.

Acrossthe key hubs, gains were confined at Transco Zone 6 NY, where day-ahead naturalgas prices rose 39 cents on average to an index at $1.680/MMBtu. Conversely,PG&E Gate saw spot gas price action shed about 11 cents on the session toaverage at $1.850/MMBtu, as benchmark Henry Hub cash gas pricing deflated by alittle more than 10 cents in deals averaging at $1.879/MMBtu and Chicagonext-day gas price activity faltered by roughly 6 cents to an index at$1.927/MMBtu.

On aregional basis, Northeast cash gas price action climbed by nearly 30 centsagainst the wider decline to an index at $1.832/MMBtu, as West Coast day-aheadgas pricing retreated by a little more than 12 cents in transactions averagingat $1.526/MMBtu. Gulf Coast next-day gas price activity slumped by about 8cents in trading to average at $1.783/MMBtu, as Midwest spot gas pricesrecoiled by almost 9 cents on average to an index at $1.759/MMBtu.

Marketprices and included industry data are current as of the time of publication andare subject to change. For more detailed market data, including power andnatural gasindex prices, as well as forwards and futures, visitour Commodities Pages.