After ending the prior session 2.1 cents lower at $2.617/MMBtu, NYMEX April natural gas futures were near unchanged overnight ahead of the Friday, March 23, open, as market participants considered changing fundamentals. At 6:50 a.m. ET, the contract was 0.8 cent lower at $2.609/MMBtu while trading from $2.604/MMBtu to $2.627/MMBtu.
Colder weather that drove up heating demand relative to the norm is expected to have impacted the latest U.S. Energy Information Administration storage report that outlined a net 86-Bcf withdrawal for the week ended March 16, which trailed the average anticipated 90-Bcf drawdown and the 137-Bcf year-ago withdrawal but bested the 53-Bcf five-year average pull.
Total working gas stocks sit at 1,446 Bcf, or 667 Bcf below the year-ago level and 329 Bcf below the five-year average of 1,775 Bcf.
In its revised end-of-withdrawal-season inventory projection, the EIA sees working gas stocks reaching 1,373 Bcf on March 31, or 19% lower than the five-year average, assuming storage draws match the five-year average for the remainder of the season.
A recent reduction in demand alongside an uptick in production, however, suggest the possibility of a modest storage draw in the subsequent storage report that will cover the current week to March 23. The latest "Natural Gas Weekly Update" for the week to March 21, much of which will be reflected in the forthcoming inventory data, shows total U.S. gas consumption 5% lower week on week at 76.6 Bcf/d but dry production up 1% at 79.1 Bcf/d.
Stubborn cold in midrange forecasts could generate some residual heating demand, but higher low temperatures associated with the spring shoulder season and a warming trend on deck further out spell diminishing weather-driven demand support going forward.
Updated National Weather Service forecast maps show below-average temperatures holding over portions of the Rockies and a large area of the central U.S. in the six- to 10-day period then expanding into the bulk of the country's eastern two-thirds in the eight- to 14-day period. Average to above-average temperatures will initially envelop nearly the entire eastern U.S., most of the Gulf Coast and much of the West, but will become contained to parts of the Southeast, fringes of the Gulf Coast and most of the West further out.
In the longer range, The Weather Company sees warmer-than-normal weather over the southern tier of the U.S. from April through June, while the National Oceanic and Atmospheric Administration anticipates warmer-than-normal weather over much of the country over the same period.
Lackluster weather-related demand should encourage the transition from weekly storage withdrawals to injections.
Price activity for next-day natural gas was generally tethered to the downside Thursday by mostly bearish demand expectations.
Among the key delivery locations, benchmark Henry Hub day-ahead gas prices led the downtrend with an almost 12-cent retreat on average to an index at $2.624/MMBtu. Chicago spot gas pricing followed with a near 10-cent slump in trades averaging at $2.475/MMBtu, then Transco Zone 6 NY cash gas price activity that unraveled 7 cents on the day to average at $2.730/MMBtu and PG&E Gate hub action that eased by about 1 cent to an index at $2.682/MMBtu.
Regionally, Gulf Coast and Midwest next-day gas prices faltered by about 7 cents on average to indexes at $2.555/MMBtu and $2.298/MMBtu, respectively. Northeast day-ahead gas price action was roughly 25 cents weaker on the session at an index at $2.667/MMBtu, while West Coast spot gas price activity was near unchanged day on day at an index at $2.009/MMBtu.
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