NYMEX May natural gas futures extended early gains to a high of $3.337/MMBtu following the midmorning release of U.S. Energy Information Administration storage data that outlined a smaller-than-anticipated injection into the natural gas supply in the week to March 31.
The contract pulled back heading into the settle and finished the day 6.5 cents higher on the session at $3.331/MMBtu.
The EIA reported a net 2-Bcf injection into natural gas inventories in the Lower 48 during the week ended March 31, which marks the end of titular withdrawal season. The build was below market expectations, which called for a 9-Bcf build in stocks, as well as the 6-Bcf injection reported for the same week in 2016.
Although counter to the five-year average withdrawal of 13 Bcf, and improving the total U.S. working gas supply to 2,051 Bcf, or 427 Bcf below the year-ago level and 265 Bcf above the five-year average storage level of 1,786 Bcf, the downside miss against expectations bolstered the market as traders consider the early, but slow, start to injection season.
"The report implies a somewhat tighter background supply/demand balance," Citi Futures analyst Tim Evans said.
However, fundamental weakness limited the day's gains and looks to drive additional losses as weather is forecast to continue warming, and mild conditions across the bulk of the U.S. are expected to reduce heating demand ahead of any significant bump-up in cooling load.
The six- to 10-day outlook from the National Weather Service shows above-average temperatures in the eastern third of the U.S. that should limit heating demand, average and above-average temperatures across the majority of the central U.S. and mostly average and above-average temperatures in the West.
In the eight- to 14-day period a mix of average and below-average temperatures in a small portion of the Northeast and across the West could reintroduce some heating demand, but the dominance of above-average temperatures across the bulk of the country should limit demand and allow for continued storage growth.
Day-ahead trade was mixed for gas delivery April 7, as weather and demand forecasts varied.
Moving higher, Transco Zone 6 NY deals were more than 5 cents higher to an index near $3.20, Tetco-M3 traded about 5 cents higher to an index near $3.15 and Henry Hub trades were about 1 cent higher to an index atop $3.20.
Conversely, Waha trades were nearly 10 cents lower to an index below $2.85, Chicago stumbled more than 10 cents to an index near $3.10, SoCal Border trades were nearly 10 cents lower to an index near $2.90 and PG&E Gate trades were more than 1 cent lower to an index near $3.35.
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