Generally warmer average national temperatures helped limit storage withdrawals during the report week, forcing the front-month natgas contract to retrace the violent upward path it took to long time highs a few days ago. The ensuing falloff is noted as the largest near-month futures price movement in more than four years by EIA and traders looked to even positions all along the way.
If prices remain above $4.00, however, it will give producers inspiration to ratchet up production and refill lagging stocks. Long-term forecasters do, however predict 2015 prices at or above $4.00 based on recent selloffs in deferred summertime contracts which indicates traders expect the supply balance to soften again by the end of 2014.
- Inventories stand at 1,348 Billion cubic feet (Bcf) -- 40.2% below year-ago and 34.5% below the five-year average.
- This week notes a 95 Bcf net withdrawal from storage.
- Snowstorms are predicted across the Midwest this weekend and if cold weather follows, natural gas demand will increase for home heat.
April '14 natural gas opened today at $4.48 -- mercifully $1.58 3/4 below last week's Natgas Report. Bulls have watched the contract traipse higher through the day so far and will target $4.65 and $4.90 on their way to $5.20 with very strong support at $4.45.
The average temperature in the continental United States during the report week was 39.3°F -- 3.4°F warmer than the same time last year and 1.7°F above the 30-year average temp.
Futures prices fall sharply on Monday and Tuesday, closing down on Wednesday. The near-month futures price for March delivery began the week at $6.149/MMBtu last Wednesday, falling sharply Monday. Despite expectations for cooler-than-average March weather, the futures price fell by $0.690 between Friday and Monday, closing at $5.445/MMBtu on Monday, and continuing to fall sharply on Tuesday. The price decrease from Friday to Monday was the largest near-month futures price movement in more than four years. The March contract continued to decline Wednesday, settling at $4.855/MMBtu as the March futures contract expired, giving way to the April contract, according to EIA.
Consumption increased consistently through the report week as last Thursday's moderate weather became progressively colder. Yesterday was the coldest day of the report week, with total consumption reaching 108.4 Bcf/d. Even so, the average consumption this report week, at 83.7 Bcf/d, was below last week's level by 3.5 Bcf/d (4%), according to EIA.
Indicated text and stocks chart provided by EIA.