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June gas futures search for direction ahead of storage data

Afterending the prior session up 5.5 cents at $2.141/MMBtu, June natural gas futureswere near unchanged overnight ahead of the Thursday, May 5, open, absent anysignificant revisions to fundamentals, with the weekly storage report due outat midmorning poised to become the next major catalyst for change.The contract was last eyed at $2.150/MMBtu, higher by a scant 0.9 cent.

Themarket continues to search for a comfortable level, as robust inventories and lacklusterweather-related demand implied by the calendar continue to run counter toconcerns surrounding production decline amid a severely diminished drilling rigcount.

Storagelevels that are already elevated are set to continue building when the U.S. EnergyInformation Administration releases its next weekly inventory data at 10:30a.m. ET on Thursday that will cover the week to April 29.

leading up to thestorage report release call for an addition to stocks from 56 Bcf to as much as75 Bcf, with consensus formed at a 66-Bcf injection. This will compare againsta 64-Bcf five-year-average build and a 77-Bcf injection seen in thecorresponding week in 2015.

Theweek's data would come on the heels of a 73-Bcf addition reported for the week to April 22 thattook overall stock levels to 2,557 Bcf, or 870 Bcf above the year-ago level and832 Bcf above the five-year average of 1,725 Bcf.

Whilea storage injection at consensus would mark a slowdown in the pace ofinventory-building, it would expand the surplus to the five-year average. Anaddition to stocks at the consensus figure would drive total working gasinventories to 2,623 Bcf, widening the year-over-five-year-average overhang to834 Bcf but trimming the surplus to the year-ago level to 859 Bcf.

Withmild weather in store in the coming weeks that suggest limited demand foreither cooling or heating, natural gas should be allowed to flow more heavilyinto underground storage facilities, which would spell a ramped up pace ofstorage-building.

Thelatest National Weather Service forecast map for the six- to 10-day periodshows above-average temperatures over a majority of the East and West flankinga wide swath of average temperatures encompassing much of the Rockies and bulkof the central U.S. Below-average temperatures are indicated only for smallareas in the west-central U.S.

Above-averagetemperatures overtake more of the West and portions of the Gulf Coast, whilecontinuing to hold over a large section of the East in the eight- to 14-dayoutlook. Below-average temperatures settle over the midsection of the Midwestand a patch of the Gulf Coast, as average temperatures linger over the balanceof the central U.S.

Buildinginventories and a lack of weather support feed the downside for futures, butmounting concern over declining production undermine steeper losses.

Themost recent EIA production data that shows a drop in monthly natural gasproduction from January to February from 2.30 Tcf to 2.18 Tcf alongside arecord-low rig count are providing a floor for values.

Incash action, natural gas prices for day-ahead flow predominantly favored theupside Wednesday, as weather remained mixed but overall supportive.

Acrossthe key delivery locations, a near 12-cent gain was seen driving Transco Zone 6NY next-day gas price activity to an index at $1.991/MMBtu, as a 9-cent advancetook benchmark Henry Hub cash gas pricing to an average at $2.030/MMBtu. Anuptick of 7 cents brought PG&E Gate day-ahead gas price action to anaverage at $2.128/MMBtu, as an increase of about 3 cents steered Chicago spotgas pricing to an index at $2.094/MMBtu.

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Regionally,Northeast and West Coast spot gas prices ascended by roughly 6 cents on averageto indexes at $2.072/MMBtu and $1.854/MMBtu, respectively, as Gulf Coast cashgas pricing rose by a little more than 7 cents on the session to average at$1.936/MMBtu and Midwest next-day gas price activity climbed by nearly 5 centsin trading to an index at $2.015/MMBtu.

Market prices and included industry data are currentas of the time of publication and are subject to change. For more detailedmarket data, including power andnatural gasindex prices, as well as forwards and futures, visitour Commodities Pages.