Weekly spot natural gas prices fall in response to warmer weather

Weekly cash natural gas prices lost ground for a third week as mild weather curbed heating demand across much of the Lower 48.

NGI Weekly Spot National Avg. for John On February 31, 2 fell 26.5 cents to $2,115, with declines in all regions except the Northeast.

Cold weather has fueled a rise in a number of places in the Northeast against a broader retreat. Bids ranged from $1,700 to $7,500 s Northeast Regional Avg. up 60.0 cents to $3,660. Among the biggest gains in the region Algonquin City Gate added $1,600 to $4,970.

Elsewhere, regional losses were heaviest in West Texas and the Rockies amid mostly mild weather.

in west texas, Permian El Paso down 67.0 cents on its weekly average to $1,250 a Wow fell 68.0 cents to $1,215. Meanwhile in the Rocky Mountains Cheyenne Hub fell 34.5 cents to $1,745 for the week and KRGT Rec Pool fell 73.0 cents to $2,295.

In futures, the Nymex March contract edged higher after taking the lead on Tuesday, trading between modest gains and losses with little momentum. The March natural gas futures contract settled at $2.079/MMBtu on Friday, up 2.9 cents on the day but down more than 20% from a year earlier.

The newly minted March contract sought direction from the weather and found modest support in longer-term outlooks that pointed to a cool second half of February. However, near-term warm weather and the outlook for storage have stalled further gains.

On Friday, analysts said the market was holding on to longer-term views of a return of cold weather from mid-February as concerns about the transition to a cold snap fueled buying interest.

Independent analyst Tim Evans for NGI said the market had seen some degree of bargain hunting in March futures ahead of the $2 level. “People see it as a bit of a buying opportunity,” Evans said. He noted that the lower the price, the smaller the downside risk remains.

“However, the challenge is that the upcoming temperature outlook is quite warm,” Evans added.

Supply problems

Analysts struggled to book gains at the start of the week as weather forecasts had it “massively warmer” at the start of the week. According to NatGasWeather, the US model lost more than 40 days of heating degrees from Sunday to Tuesday.

However, the market caught on to forecasts of cooler weather as forecasters expressed more confidence in a shift towards a cooler back half of February.

Still, gains were hard to come by amid an outlook for end-of-season storage as natural gas stockpiles were likely to taper in the second half of winter, analysts said.

EIA announced natural gas production from storage 197 Bcf for the week ending January. 26, another triple-digit pick and the fourth in a row to land at the high end of a wide spectrum of expectations.

Early storage estimates provided to Reuters for the week just ended pointed to withdrawals ranging from 64 Bcf to 185 Bcf, with an average decline of 86 Bcf. That compares with withdrawals of about 208 Bcf during the same week last year and a five-year average decline of about 193 Bcf.

NatGasWeather said storage surpluses could rise back above 300 Bcf after the next three EIA reports print much lighter-than-normal draws due to exceptionally warm versus normal U.S. temperatures.

Production and demand

Production in the week ending in February contributed to expectations of ample natural gas supplies. 2, with little indication of producer decline even at current price levels. Wood Mackenzie data showed that production averaged 105.8 Bcf/d over the past seven days.

On the demand side, demand in the residential and commercial sectors fell for the week, reflecting milder weather conditions and hinting at what could be to come once winter officially ends. At the same time, LNG exports have held around 14 Bcf/d as the Biden administration reviews liquefied natural gas policy.

Friday cash deductions

Spot natural gas traded on Friday for a typical Saturday-to-Monday package came under pressure due to mild weather expected across much of the country through Monday.

According to the National Weather Service, Texas should see highs in the low 70s over the weekend. Highs would drop into the low 60s on Monday. However, overall lackluster demand led to a sharp drop in gas prices across the region.

West Texas led the retreat as W.TX/SE NM Regional Avg. fell 80.0 cents to an average of 78.0 cents. South Texas lost 39.0 cents to $1,385 Tennessee Zone 0 South contributed to the decrease of 30.5 cents S.TX Regional Avg. to $1,540.

It is also moving lower after early gains on Thursday Rocky Mtns. Regional Avg. down 12.0 cents to $1,920, weighed down by a 15.0 cent loss Cheyenne Hub to $1,665.

Temperature highs in the 30s in the Northeast supported the downward trend and supported values ​​in regional business centers. Transco zone 6 outside NY added 4.0 cents to $1,920, while Algonquin City Gate gained $2,630 to $7,095 in lighter trading volume. All in all, Northeast Regional Avg. jumped from $1,065 to $4,555.

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