Natural gas rose by more than 2% on Monday after it slid to the lowest in seven weeks on Friday as expectations for an upcoming warm up in the US gave way to forecasts for cold weather, boosting demand for the power-station fuel.
On the New York Mercantile Exchange, natural gas for delivery in April traded at $4.527 per million British thermal units at 10:42 GMT, up 2.31% on the day. Prices held in a daily range between $4.482 and $4.531 per mBtu. The contract jumped by nearly 1% on Friday after it earlier fell to a seven-week low of $4.341, but settled the week 4.4% lower.
Natural gas rebounded on Monday following a shift in weather predictions over the weekend. According to NatGasWeather.com, the forecasting models that had previously called for a big warm up beginning between March 22nd and 25th backed off, giving way to much colder conditions. The website reported that cold Canadian air will set up across the highest use states, boosting heating demand.
Parts of the US will see a decent warm up on Tuesday, NatGasWeather.com said, before another weather system sweeps across the northern US on Wednesday and Thursday, carrying light precipitation and low temperatures. Friday and Saturday are expected to bring a quick warm up before an impressive cold front enters the eastern and northern US, pushing temperatures across the Midwest and Northeasts highest-use states below the average for the next full week.
According to AccuWeather.com, temperatures in New York will fall to as much as -2 degrees Fahrenheit on March 24th, 5 degrees below average, same as in Boston where the low will be -4 degrees Fahrenheit. Readings in Chicago will bottom at -6 degrees Fahrenheit, compared to the average of 1 degree, while Detroit will see a low of -6 degrees, 6 below usual.
US inventories
Natural gas prices plunged nearly 2.4% last Thursday after the Energy Information Administration reported US natural gas inventories fell by 195 billion cubic feet in the seven days through March 7th, less than analysts median forecast of a 199 billion cubic feet drop and compared to a withdrawal of 145 billion cubic feet the same week a year ago. However, the decline was more than double the five-year average drop of 95 bcf during the comparable period.
Total gas held in US underground storage hubs fell to a 10-year seasonal low of 1.001 trillion cubic feet. US gas stockpiles were 48.9% below last year’s amount of 1.959 trillion cubic feet during the comparable week. The deficit to the five-year average widened to a record 46.2%, up from 38.8% a week earlier.
Inventories at the East Region received a net withdrawal of 95 bcf and fell to 430 bcf, 47.9% below the five-year average of 825 billion cubic feet. Stockpiles in the West Region fell by 21 bcf to 169 bcf and were 42.9% beneath the average. Inventories at the Producing Region slid by 79 bcf. At 402 bcf, they were 45.5% below the five-year average amount of 737 billion cubic feet.
Data by the US Commodities Futures Trading Commission showed on Friday that hedge funds and money managers reduced their net-long positions in natural gas futures in the week ended March 11 to 149 267 contracts, down 1.9% from the preceding weeks 152 182 contracts.
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