Natural gas futures advanced on Wednesday, as weather forecasting models called for much-below-normal temperatures in many densely-populated US areas, stoking demand for the power-station fuel.
On the New York Mercantile Exchange, natural gas for delivery in April traded at $4.489 per million British thermal units at 12:25 GMT, up 0.73% on the day. Prices held in a daily range between $4.503 and $4.445 per mBtu. The contract fell to a seven-week low of $4.341 on March 14 and settled last week 4.4% lower.
A modest weather system will sweep across the northern US over the coming days, NatGasWeather.com reported on March 19. The latter will bring wintry mix of moderate precipitation over the upper Great Lakes and New England. Friday and Saturday are expected to bring a quick warm up before an impressive cold front enters the northern US and pushes fairly deep into the central US, remaining in place from March 23rd through March 27th.
Unseasonably strong natural gas and heating demand can be expected, as the cold front will lead to temperature anomalies of 15-30 °F colder-than-normal across many US regions.
According to AccuWeather.com, temperatures in New York will fall to as much as 26 degrees Fahrenheit on March 23rd, 12 degrees below average, same as in Boston where the low will be 18 degrees Fahrenheit, 15 below normal. Readings in Detroit will bottom at 18 degrees Fahrenheit, compared to the average of 31 degrees.
US gas inventories levels
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.
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