After climbing by 4.9 cents to settle at $2.735/MMBtu ahead of the weekend, NYMEX May natural gas futures derived additional support overnight leading to the Monday, April 16, open, from the recent and anticipated continuation of storage erosion beyond the traditional start to the refill season April 1. At 9:20 a.m. ET the contract was 2.0 cents higher at $2.755/MMBtu.
For only the fourth time since 2010, natural gas withdrawals on a national level were reported in April, as the U.S. Energy Information Administration detailed a 19-Bcf drawdown from stocks in its latest storage data for the week ended April 6 that defied the five-year average and year-ago injections of 9 Bcf each. It left overall inventories at 1,335 Bcf, or 725 Bcf below the prior-year level and or 375 Bcf below the five-year average of 1,710 Bcf.
Weather during the storage report week is seen to have bolstered heating demand relative to historical averages.
Varied but ultimately supportive weather was observed in the subsequent days, fueling expectations for another atypical pull from stocks in the low 20s Bcf when the next inventory data that will cover the week to April 13 is released on Thursday, April 19.
Heat in the Pacific and southern regions combined with cold in the northern regions to drive both heating and cooling demand during the week ended April 11, much of which will be reflected in the upcoming storage report period. A 4% week-on-week gain in power burn and a 14% increase in residential/commercial-sector demand contributed to a 7% uptick in total U.S. gas consumption during the week in review, according to the EIA’s latest “Natural Gas Weekly Update.”
Weather conditions moderate in the coming weeks and months, however, likely keeping demand subdued and limiting upside momentum for futures.
Revised National Weather Service forecasts show below-average temperatures encompassing the fringes of the West and nearly the entire eastern two-thirds of the U.S. in the six- to 10-day period, but shrinking in scope to be contained to much of the mid-Atlantic, the lower tier of the Midwest and most of the South in the eight- to 14-day period.
Average to above-average temperatures initially confined to Florida, a few patches of the central U.S. and a majority of the West will eventually overtake the Northeast, the balance of the mid-Atlantic, much of the Midwest and more areas of the South.
Further out, forecasters point to warmer-than-normal weather over a large part of the U.S. from April through June.
Weather as projected will likely erase lingering natural gas demand for heating ahead of the onset of significant cooling load associated with the summer heat, facilitating the onset of the injection season as natural gas is allowed to flow more freely into underground storage facilities.
A rising rig count portending production growth feeds the possibility of a healthy pace of storage rebuilding in store. The latest Baker Hughes data show an increase of five rigs in the U.S. total rig count for the week to April 13 to 1,008 rigs.
The EIA sees natural gas inventories climbing to 3,767 Bcf by the traditional end of injection season Oct. 31, with injections totaling about 2,416 Bcf, or 11.3 Bcf/d, the second largest volume of refill season net injections on record.