Weekly natural gas cash prices advanced amid volatile but ultimately strong price action in the Northeast, where late winter bursts of cold galvanized heating demand and fueled a pair of surges in spot prices.

EIA storage feb 26

NGI’s Weekly Spot Gas National Avg. for the March 1-5 period climbed 20.5 cents to $2.945.

Comfortable conditions moved in early and hung around for the week across much of the central and southern United States, with highs in the 40s to 70s over large swaths of the country. But parts of the Northeast experienced lows in the teens at stages during the week, enough to keep furnaces cranking and natural gas demand solid.

Driven by bouts of cold – rather than a sustained freeze – Northeast prices surged Monday and Wednesday, gaining enough ground to offset losses later in the week.

As the trading week closed, PNGTS was up $2.465 to $6.635, while Tenn Zone 6 200L was ahead $2.480 to $6.145, and Dracut was up $4.250 to $7.000.

The week ahead, however, looks less favorable for prices both in the Northeast and nationally.

NatGasWeather noted that a warm ridge was expected to set up over the eastern two-thirds of the country. “Upper high pressure will rule” much of the Lower 48, the firm said, with “widespread highs of 50s to 80s for light demand besides the slightly cool and unsettled West.”

Production, meanwhile, recovered during the covered week, regaining losses caused by the Arctic blast in mid-February that descended into Texas, rattled its energy system and forced sharp cutbacks to output. Production hovered around 90 Bcf at the end of the week – the level at which it had reached prior to the extreme cold snap in the Lone Star State.

“Production levels rebounded quickly after most freeze-offs and other cold related impacts resolved,” Wood Mackenzie analyst Dan Spangler said. He noted that production bottomed out at around 70 Bcf/d on Feb. 17.

Bumpy Ride

Natural gas futures started the week with back-to-back gains on Monday and Tuesday, as liquefied natural gas (LNG) levels strengthened.

LNG feed gas volumes hung around 10 Bcf Tuesday, up more than four-fold from the lows of the Texas freeze. The Texas cold snap had also hampered LNG activity in February, with volumes dropping to a low of 1.3 Bcf/d on Feb. 16, Spangler said.

Futures traded down on Wednesday, hanging in a holding pattern ahead of Thursday’s U.S. Energy Information Administration (EIA) storage report.

Disappointment and bewilderment rippled through markets after the EIA posted a surprisingly bearish print. Despite further LNG strengthening – feed gas volumes hit 11 Bcf, near record levels – futures faltered. The April Nymex contract dropped 7.0 cents on the day.

Wintry conditions persisted in the Midwest and East during the EIA covered week, fueling expectations for a triple-digit storage build in the 130s-140s Bcf. Ahead of the storage report, a Bloomberg survey found a median withdrawal estimate of 140 Bcf, for example, while a Reuters poll landed at a median estimate for a 135 Bcf decline in stocks. NGI’s model estimated a 135 Bcf pull.

EIA reported a withdrawal of 98 Bcf. For analysts, it marked one of the biggest misses in recent memory.

“Confusion reigns in the natural gas market in the wake of an unusual EIA report. We received one of the most, if not the most bearish EIA report we can ever recall,” Bespoke Weather Services said. “We simply cannot rationalize this number at all using our data, and feel it is some sort of implicit revision, or simply a number that does not reflect the supply/demand balances we will see going forward.”

That said, the firm added, “what if it somehow is close? It would imply a very bearish scenario has unfolded. Again, that is not our lean, but just adds to the confusion.”

The bewilderment spilled into Friday, and futures dipped further. The April Nymex contract settled at $2.701/MMBtu to close the trading week Friday, down nearly 3% from the prior week’s finish.

Friday Cash

Spot gas prices on Friday for weekend through Monday delivery declined across the country as temperatures rose. NGI’s Spot Gas National Avg. shed 25.0 cents on the day to $2.755.

National Weather Service reports showed dry conditions and comfortably warm temperatures across most of the Lower 48 Friday, with highs of 50s in the Upper Midwest and 70s over much of the South and West.

The Northeast was the exception and was expected to remain so into the weekend, with highs in the 30s and lows in the teens for much of the region. However, after surges earlier in the week, Northeast prices also retreated Friday.

Algonquin Citygate, which serves the Boston area, shed $1.735 day/day to average $5.365. Prices on average were off more than $1.000 in the Northeast.

Prices were lower across all other regions as well, though most hubs were off only a few cents.

In the Midwest, Dawn lost 4.0 cents to $2.620, and in Texas, El Paso Permian fell 10.0 cents to $2.395.

Dominion Energy Cove Point in the Southeast declined 7.0 cents to $2.790.

Out West, Malin lost 6.5 cents to $2.575 and Kern Delivery gave back 13.0 cents to $2.755.

On the pipeline front, Cheniere Energy Inc.’s Corpus Christi LNG posted a notice for a one-day maintenance event on Monday. Wood Mackenzie’s Spangler said the work could limit flows to 2,142,000 MMBtu on Monday through Tuesday afternoon. Nominations for Friday’s gas day were 2,448,892 MMBtu, he said.

However, he added, “flows over the past few days are the highest ever seen at the facility.”