Natural gas futures declined on Wednesday as long-term weather forecasting models called for a significant warm-up across most of the densely populated US areas, curbing demand for the power-station fuel.
On the New York Mercantile Exchange, natural gas for delivery in April traded at $4.392 per million British thermal units at 10:17 GMT, down 0.51% on the day. Prices held in a daily range between $4.410 and $4.359 per mBtu. Yesterday the energy source advanced 2.5%, the most in three weeks to settle at $4.399 per mBtu. However, the contract registered a second weekly decline and settled last 5-day period 2.4% lower, after losing 4.4% in the previous week.
US weather outlook
Cold air will remain anchored over the highest-consumption states of the northern US in the next few days, NatGasWeather.com reported on March 25.
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. The Great Lakes and Northeast will experience moderate snowfall Tuesday into Wednesday, followed by a quick warm surge, which will push deep into the eastern US, Friday into Saturday. However, a couple of days of below-normal temperatures will close out the month.
However, NatGasWeather.coms extended forecast for the period March 31st-April 5th, called for gradual warm-up during the outlook period as the pattern transits from colder-than normal to near-normal. There will be surges of milder air, leading to near-normal temperatures, when averaged over the period for the central and eastern US and even warmer over the West. This will significantly reduce natural gas and heating demand.
US gas inventories levels
The Energy Information Administration reported last Thursday 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.
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