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May natural gas rally ends as market eyes weather and storage

May naturalgas futures ended the recent rally with a day of losses Thursday, April 14, as astill healthy natural gas supply, despite a larger-than-anticipated storage pulloutlined by the U.S. Energy Information Administration in its report out at midmorning,weighed on values. The contract settled 6.6 cents lower at $1.970/MMBtu.

The EIAstorage report for theweek to April 8 showed 3 Bcf was withdrawn from the natural gas supply, more thanthe 1-Bcf average draw anticipatedby market participants surveyed ahead of the data's 10:30 a.m. ET release.

Thisweek's storage drawdown compared against the five-year average injection of 22 Bcfand the year-ago injection of 49 Bcf, and brought total U.S. working gas supplyto 2,477 Bcf, just below the fresh end-of-withdrawal-season record high of 2,480Bcf.

Withstocks still 956 Bcf above the year-ago level and 849 Bcf above the five-year averagestorage level of 1,628 Bcf, there was little room for additional gains that hadbeen supported earlier in the week by production data that showed an anticipated1.1% decline in U.S. shale gas production in May.

The marketcontinues to look at weather as a gauge for demand, and at the record-high end-of-shoulderseason supply, with concerns that inventories will reach levels that test storagecapacity limits.

"Thequestion of headroom between current inventories and the total theoretical storagecapacity creates the possibility that prices could head lower if adequate summercooling demand fails to materialize," the American Gas Association said inits latest Natural Gas Market Indicators report issued April 14.

Aheadof the summer cooling season, spring weather forecasts for the near- to midrangesuggest mild conditions that should produce lackluster demand.

The NationalOceanic and Atmospheric Administration anticipates that above-average temperatureswill engulf the majority of the U.S. in the six- to 10-day period, with only portionsof the Northeast and South Texas expected to see average temperatures, and justa small segment of the Northeast expected to see below-average temperatures.

Above-averagetemperatures expand to include all of Texas and more of the Northeast in the eight-to 14-day outlook, with only a portion of the Northeast expected to see averagetemperatures, and with no below-average temperatures in the forecast.

Withmild weather anticipated into the week's closing session, spot gas product tradedlower at hubs across the country.

Lossesof more than $1.00 were reported at Algonquin Citygates as the average slipped toaround $2.90, while losses at other Northeast locations paled in comparison. Iroquois-Waddingtondeals slipped nearly 10 cents to an average around $2.10, TETCO-M3 traded about15 cents lower to an index near $1.40 and Transco Zone 6 NY trades were lower bymore than 15 cents to an index below $1.50.

Lossesof about 5 cents were reported at the Henry Hub, where the index was marked near$1.90, signaling similar losses at hubs across the bulk of the country. Waha tradedto an index near $1.75, Chicago slipped to around $1.85, CIG slumped to around $1.65,PG&E was nudged to around $1.90 and SoCal Border averaged near $1.75.

Market prices and included industrydata are current as of the time of publication and are subject to change. For moredetailed market data, including our power,naturalgas and coalindex prices, as well as forwardsand futures,visit our Commodities Pages. To view detailed EIA Weekly Natural Gas Storage data,go to our NaturalGas Storage Page.