Natural gas futures declined for a fourth day on Wednesday, touching the weakest level since January 20, as forecasts for warmer weather in the US reduced demand for the power-station fuel.
On the New York Mercantile Exchange, natural gas for delivery in May traded at $4.247 per million British thermal units at 09:40 GMT, down 0.68% on the day. Prices held in a daily range between $4.253, and $4.242 per mBtu, the weakest since January 20. The contract snapped two weeks of declines, as it added 4% last week, following a bullish government gas storage report.
US weather outlook
While one spring storm moves out of the Great Lakes and Northeast early today, a new one will be spinning up over the central US with increasing showers and thunderstorms in the warm sector and some heavy snowfall into portions of the Midwest and Great Lakes, NatGasWeather.com reported on April 1.
After the storm retreats on Friday, cool conditions will set up through the weekend, before another surge of milder conditions returns back early next week.
There is an increasing probability that another fairly strong spring storm develops during the middle of next week, with the potential to bring some very chilly Canadian air and push as deep as the southern US.
However, the website reported that after April 11th much milder temperatures will push into many US regions, significantly easing natural gas and heating demand.
According to AccuWeather.com, temperatures in Boston will fall to as much as 44 degrees Fahrenheit on April 11th, 5 degrees above average, same as in New York where the low will be 47 degrees Fahrenheit, 4 above normal. Readings in Detroit will bottom at 41 degrees Fahrenheit, compared to the average of 38 degrees.
US gas inventories levels
The Energy Information Administration reported on Thursday that US natural gas inventories fell by 57 billion cubic feet in the seven days through March 21st, more than analysts’ median forecast of a 52 billion cubic feet drop and compared to a withdrawal of 90 billion cubic feet the same week a year ago. However, the decline was more than 8 times larger than the five-year average drop of 7 bcf during the comparable period.
Total gas held in US underground storage hubs fell to a 11-year seasonal low of 896 billion cubic feet. US gas stockpiles were 50.1% below last year’s amount of 1.795 trillion cubic feet during the comparable week. The deficit to the five-year average widened to a record 50.8%, up from 47.9% a week earlier.
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