Natural gas futures hit session high after EIA supply data

Natural gas rose to a one-week high on Thursday after the Energy Information Administration reported an inventory decline in line with expectations and double the five-year average withdrawal.

Natural gas for delivery in April traded 2.35% higher at $2.834 per million British thermal units at 15:54 GMT, shortly after it jumped to a one-week high of $2.845. The contract rose 2.1% on Wednesday to $2.769.

Data by the Energy Information Administration showed that US natural gas stockpiles fell by 228 billion cubic feet in the seven days through February 27th, in line with analysts expectations for a decline in the range of 222-235 bcf. This compared to the five-year average withdrawal of 115 bcf and the year-ago drop of 144 bcf.

Total gas held in US storage hubs amounted to 1.710 trillion cubic feet last week, expanding a deficit to the five-year average inventory level of 1.853 trillion to 7.7%, or -143 bcf, from 1.5% a week earlier. Stockpiles stood at 1.218 trillion cubic feet during the comparable period a year ago, 40.4% below current levels.

Inventories in the East Region fell by 121 bcf to 722 bcf, 15.5% below the average, while supplies in the West Region slid by 16 bcf to 355 bcf and were 24.1% above the five-year average. The Producing Region saw a net withdrawal of 91 bcf to 633 bcf, bringing inventories to a deficit of 11.2% compared to the average.

Gains based on the hefty inventory withdrawal, however, were expected to remain checked on projections for readings across the US to reach seasonal levels next week, significantly reducing heating demand.

According to NatGasWeather.com, natural gas demand in the US will be easing from high to moderate, compared to normal, through March 11th, with a neutral weather trend for the following seven days.

The latest Arctic outbreak continues its push into the Southeast, carrying heavy rain across the east-central US, before exiting off the East Coast on Friday. The northern US will see overnight lows in the single digits and below zero through Saturday morning, inducing very strong heating demand.

The western and central US will enjoy dry and mild conditions through the weekend as high pressure builds, while also extending over the Great Lakes and Northeast early next week, pushing highs into the upper 40s and lower 50s. The South will also enjoy warm weather as readings peak in the upper 60s and 70s.

As next week progresses, Canadian weather systems carrying rain, snow and below-average temperatures will track across the North, NatGasWeather.com said, but temperatures across the eastern and central regions will rise to near or above the normal as high pressure strengthens, significantly curbing national heating demand. While the West remains warm and dry early in the week, Pacific weather systems arriving in the next days will bring showers and cooler readings. Weather developments, especially for the North, will need close monitoring as it remains unclear how much cold Canadian air will be tapped into the far northern US.