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March gas futures advance ahead of storage data release

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March gas futures advance ahead of storage data release

After shedding 5.7 cents in the prior session to settle at $2.702/MMBtu, NYMEX March natural gas futures ticked higher in another round of technical buying overnight ahead of the Thursday, Feb. 8, open and the midmorning release of the weekly storage report. At 7:04 a.m. ET, the contract was up 3.4 cents at $2.736/MMBtu.

The U.S. Energy Information Administration will release weekly inventory data at 10:30 a.m. ET that will cover the week ended Feb. 2, when weather is expected to have trimmed demand. Degree day data from the National Oceanic and Atmospheric Administration for the week ended Feb. 3 shows heating degree days were 12.0% fewer than normal.

Market participants anticipate a withdrawal from stocks ranging from 99 Bcf to as much as 129 Bcf for the forthcoming storage report, with consensus formed at a 115-Bcf drawdown. That will compare to a 142-Bcf year-ago pull and the 151-Bcf five-year average draw.

Working gas in storage was at 2,197 Bcf, or 526 Bcf below the year-ago level and 425 Bcf below the five-year average of 2,622 Bcf, after the EIA outlined a 99-Bcf withdrawal for the week to Jan. 26. A pull from stocks at par with consensus would leave total working gas stocks at 2,082 Bcf, trimming deficits to both the year-ago level and five-year average to 499 Bcf and 389 Bcf, respectively.

Additional modest draws from storage look to be in store going forward, as mild to warm weather prevalent in outlooks spell ongoing demand weakness that should allow for more natural gas to remain in underground storage facilities.

The National Weather Service forecast for the six- to 10-day period shows much of the eastern and western thirds of the country gripped by above-average temperatures, as portions of the Rockies and most of the central U.S. are encompassed by average temperatures. Below-average temperatures are called only for a tiny patch of the northwest-central U.S.

Above-average temperatures shrink in scope in the East but continue to linger over a large section of the eastern third and overtake more of the western U.S. in the eight- to 14-day outlook, as average temperatures slightly shift eastward to settle over a majority of eastern two-thirds of the U.S. and a corner of the Rockies. Below-average temperatures remain contained but shift in scope to a small area of the northeast-central U.S.

A continuation of the slow pace of storage erosion should equate to a relatively healthy end-of-season natural gas supply.

Price activity for natural gas moved for Thursday flow was aimed in diverging directions.

Looking at the key delivery locations, a $2.01 increase drove Transco Zone 6 NY next-day gas pricing to an index at $5.000/MMBtu, as an almost 2-cent uptick took PG&E Gate hub action to an index at $2.542/MMBtu. Conversely, roughly 1-cent losses on average nudged Chicago and benchmark Henry Hub cash gas prices to indexes at $2.675/MMBtu and $2.738/MMBtu, respectively.

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On a regional basis, Northeast spot gas price activity notched an approximately 65-cent gain in transactions averaging at $4.194/MMBtu, as West Coast day-ahead gas pricing unraveled about 4 cents to average at $2.036/MMBtu. Midwest next-day gas prices retreated by near 5 cents on average to an index at $2.523/MMBtu, while Gulf Coast cash gas price action held almost unchanged day on day at an index at $2.684/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.