Natural gas futures declined for a second day on Friday, as weather forecasting models called for a period of milder conditions in the US, curbing demand for the power station fuel and after a government report showed yesterday that US gas stockpiles fell less than projected last week.
On the New York Mercantile Exchange, natural gas for delivery in April traded at $4.359 per million British thermal units at 09:56 GMT, down 0.24% on the day. Prices held in a daily range between $4.367 and $4.313 per mBtu. The contract fell to a seven-week low of $4.341 on March 14 and settled last week 4.4% lower.
US weather outlook
A fairly quiet weather system will bring modest warming into the central and eastern US over the next few days, easing natural gas and heating demand, NatGasWeather.com reported on March 21.
However, a fairly impressive cold front will set up over the northern US and then will push 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. However, the weather pattern will moderate, as warmer surges push deep into the central and eastern US around March 27-28th.
EIA’s weekly US gas storage report
The Energy Information Administration reported yesterday that US natural gas inventories fell by 48 billion cubic feet in the seven days through March 14th, less than analysts’ median forecast of a 58 billion cubic feet drop and compared to a withdrawal of 74 billion cubic feet the same week a year ago. However, the decline exceeded the five-year average drop of 30 bcf during the comparable period.
Total gas held in US underground storage hubs fell to a 10-year seasonal low of 953 billion cubic feet. US gas stockpiles were 49.4% below last year’s amount of 1.885 trillion cubic feet during the comparable week. The deficit to the five-year average widened to a record 47.9%, up from 46.2% a week earlier.
Inventories at the East Region received a net withdrawal of 35 bcf and fell to 395 bcf, 50.3% below the five-year average of 794 billion cubic feet. Stockpiles in the West Region fell by 2 bcf to 167 bcf and were 43% beneath the average. Inventories at the Producing Region slid by 11 bcf. At 391 bcf, they were 47.3% below the five-year average amount of 742 billion cubic feet.
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