The NYMEX April natural gas futures contract expired on a high note, with the prompt-month contract settling at an eight-week high of $3.175/MMBtu, up 7.9 cents day on day.
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The contract, which tore through major resistance at $3.08 and then again at $3.147/MMBtu Wednesday, was fueled by supportive storage report expectations and book-squaring as markets prepare to enter an injection season clouded by bullish supply and demand fundamentals.
Where book-squaring ahead of the contract's roll provided some support, weather forecasts effectively capped upside movement.
The latest National Weather Service temperature forecasts call for above-average temperatures overtaking all but small portions of the Northeast and Northwest in both the six- to 10-day and eight- to 14-day periods.
Markets are more focused on Thursday's storage report though, with the Energy Information Administration expected to report a 43-Bcf net withdrawal for the week ended March 24, according to a consensus of analysts surveyed by S&P Global Platts. That would be slightly bullish compared with the corresponding five-year average withdrawal of 27 Bcf.
After Thursday's report, gas storage levels are on track to enter injection season at around 2 Tcf, significantly below the 2.46 Tcf at the 2016 season close.
"Ideally the market would like to see 3.6 or 3.9 [Tcf] at the end of the injection season, and accordingly we will need more injections than last year to reach that level," Thomas Saal, senior vice president of energy trading at INTL FC Stone, said Thursday.
While markets were able to inject nearly 1.6 Tcf of natural gas during last year's injection season, meeting that target this year may be tricky given that production currently sits over 2 Bcf/d lower than year-ago levels and LNG exports are expected to grow 92% between March and October to 3.89 Bcf/d, Platts Analytics data shows.
--Samer Mosis, firstname.lastname@example.org
--Edited by Richard Rubin, email@example.com