Weekly natural gas cash prices inched lower despite jumps in the Rocky Mountains region after a snowstorm to start the week. The early week boost was not enough to offset mild temperatures, light heating demand and flattish pricing across much of the Lower 48 as the week wore on.
NGI’s Weekly Spot Gas National Avg. for the March 22-26 period shed 13.5 cents to $2.285.
A snowstorm blanketed swaths of the Mountain West on Sunday and into Monday, dousing Denver and Salt Lake City, UT, with late blasts of winter and freezing temperatures. Rain showers and thunderstorms poured over parts of the southern Plains on Monday as well. But those chilling blasts were outshone by the comfortable conditions that permeated most regions.
While not expected to prove consistently bullish, forecasters anticipated potential rounds of heating demand in the week ahead that could boost spot prices on given days.
“There will be a modest bump in demand early next week as weather systems over the west-central U.S. track across the northern U.S.,” NatGasWeather said. Later in the week, “a colder trending system with rain and snow sweeps across the Midwest and Northeast with lows of 10s to 30s and highs of 30s to 50s.”
However, the weather is not expected to cooperate for long. “Strong upper high pressure is still expected to build over most of the U.S. April 3-9, with widespread highs of 60s to 80s for very light demand,” the firm added.
NatGasWeather said conditions are likely to prove “exceptionally bearish” and “remain so through much of the second week of April.”
Futures Forge Ahead
Natural gas futures started the week with a solid gain on Monday, boosted by robust demand for U.S. liquefied natural gas (LNG) exports, and went on to post advances over three of the week’s five trading sessions.
LNG feed gas volumes held firmly above 11 Bcf/d throughout the week – near record levels — thanks to continued Asian consumption and strengthening European demand for U.S. exports.
EBW Analytics Group pointed to “declines in European storage, suggesting that U.S. injection-season LNG exports are likely to be strong” — tightening the market and providing a needed spring season catalyst to offset mild domestic weather.
LNG strength also underpinned a solid U.S. Energy Information Administration (EIA) storage report on Thursday. The agency reported a draw of 36 Bcf for the week ended March 19, steeper than market expectations. LNG feed gas volumes strengthened during the covered week as did power burns in the Midwest and East. Stockpiles declined by 21 Bcf in both regions.
Prior to the report, NGI modeled a 17 Bcf withdrawal. The medians of major surveys ranged from draws of 21 Bcf to 25 Bcf. The decrease lowered inventories to 1,746 Bcf, compared with the year-earlier level of 2,009 Bcf and the five-year average of 1,824 Bcf.
Futures jumped more than 5 cents after the EIA print. While the prompt month tapered off by 1.3 cents on Friday, earlier advances were enough to drive an overall gain for the week. The April Nymex contract settled at $2.557/MMBtu to close the trading week, up nearly 1% from the prior week’s finish.
Friday Cash Falters
Lacking a catalyst for heating demand, cash prices on Friday declined across every region. NGI’s Spot Gas National Avg. fell 7.0 cents to $2.215 on the day.
Leading into the final trading session of the week, weather proved exceptionally active with a deadly thunderstorm that spawned widely destructive tornadoes across swaths of Alabama and neighboring states in the Southeast late Thursday.
The storm, however, did not counter mild temperatures in the region or stimulate added demand for natural gas.
Weekend forecasts added little incentive for buying either.
Forecasters expected light national demand through the weekend with high temperatures ranging from the 60s in the East to 80s across the South and areas of the West, AccuWeather forecasts showed. Highs in the 50s were expected over much of the Midwest, with cooler but moderate 40s in parts of the Mountain West.
The northeastern corner of the United States was expected to get blanketed with snow early in the weekend, according to AccuWeather, followed by a blast of cold rain and potentially more snow by Monday. But the wintry mix was forecast to be contained to the northern reaches of New England. Major Northeast markets such as Boston were expected to experience highs in the 50s over the weekend and into Monday.
Against that backdrop, prices were down throughout the western half of the country. Kern Delivery dropped 39.5 cents day/day to average $2.370, while SoCal Citygate shed 26.0 cents to $2.665 and SoCal Border Avg. lost 26.0 cents to $2.350.
Farther east, Millennium East Pool dropped 20.5 cents to $1.505.
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