Physical natural gas for delivery Friday traded lower Thursday as traders scurried to get their deals done before the release of Energy Information Administration (EIA) inventory data.
Outside the typically volatile Northeast, most points fell about a nickel to a dime, and the NGI National Spot Gas Average dropped 13 cents to $2.75. EIA reported a withdrawal of 150 Bcf, exactly the result of a major wire service survey, and prices at first sagged but managed to climb into positive territory by the end of trading. April added 4.0 cents to $3.051 and May gained 5.8 cents to $3.131. May crude oil fell 34 cents to $47.70/bbl.
At first, futures meandered about after the release of storage numbers that showed only minimal variation from expectations.
EIA reported a 150 Bcf storage withdrawal for the week ending March 17, which was in line with industry estimates, in its 10:30 a.m. EDT release. April futures were trading at $3.051 to $3.010 before the number came out. After the number's release, they stayed within that range for a good 10 minutes but broke down to the day's low at $2.986 shortly thereafter. At 10:45 a.m., April was trading at $2.995, down 1.6 cents from Wednesday's settlement.
Before the report, Raymond James and Associates was looking for a 138 Bcf withdrawal, and analysts at Wells Fargo calculated a 156 Bcf decline. A Reuters survey of 26 traders and analysts showed an average 150 Bcf pull with a range of -127 Bcf to -170 Bcf. Last year 13 Bcf was injected and the five-year pace is for a 21 Bcf pull.
"$3 was a good level of support, but it broke through, so I'm thinking there is no support at $3 in here," said a New York floor trader. "Support would be at $2.85 and $2.75 below that."
The report wasn't much of a surprise to analysts.
"We believe the storage report will be viewed as neutral," said Randy Ollenberger, an analyst with BMO Capital Markets. "Storage is trending below last year's levels; however, rising associated gas production should keep U.S. storage levels at or above five-year averages assuming normal weather."
Tim Evans of Citi Futures Perspective said the number was "slightly less than other measures such as a Bloomberg survey for 153 Bcf in net withdrawals. The data was bullish compared with the 21 Bcf five-year average for the date, but this was not a surprise. We see the swing to warmer than normal temperatures over the next two weeks as leaving the market without a further fundamental reason to explore the upside."
Inventories now stand at 2,092 Bcf and are 399 Bcf less than last year and 266 Bcf greater than the five-year average. In the East Region 59 Bcf was withdrawn, and the Midwest Region saw inventories decrease by 51 Bcf. Stocks in the Mountain Region were unchanged, and the Pacific Region was up 5 Bcf. The South Central Region dropped 45 Bcf.
In physical trading eastern points were the hardest hit, as weather forecasts called for a warming trend into the weekend. AccuWeather.com forecast that the Thursday high in Boston of 38 degrees would rise to 43 Friday and reach 50 by Saturday, 2 degrees above normal. Philadelphia's Thursday peak of 44 was predicted to climb to 53 by Friday and a spring-like 70 on Saturday, 14 degrees above normal.
Gas delivered to the Algonquin Citygate fell $1.23 to $2.78, and packages on Iroquois, Waddington came in 35 cents lower at $3.11. Gas on Tenn Zone 6 200L gave up $1.19 to $2.91.
Marcellus points were hard hit. Gas on Dominion South fell 25 cents to $2.57, and gas on Tennessee Zn 4 Marcellus skidded 33 cents to $2.44. Deliveries to Transco-Leidy Line lost 31 cents to $2.50.
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The National Weather Service in suburban Philadelphia said, "high pressure across the middle Atlantic will move offshore by Friday, while a warm front moves through the Ohio Valley. This frontal boundary will become nearly stationary near our region through Tuesday, as several waves of low pressure move along it. A cold frontal passage is expected Wednesday, followed by Canadian high pressure building into our area on Thursday."
Declines at major market centers were more modest. Gas at the Chicago Citygate eased 1 cent to $2.88, and deliveries to the Henry Hub dropped a nickel to $2.93. Gas at Opal fell 2 cents to $2.59 and gas priced at the SoCal Border Avg. Average slipped 2 cents to $2.69.