NYMEX June natural gas futures traded higher Friday, April 28, in pre-weekend short covering with weather forecasts offering some support. The contract retraced gains to a $3.298/MMBtu high and closed 3.7 cents higher on the session at $3.276/MMBtu.
The U.S. Energy Information Administration reported that residential/commercial demand during the review week to April 26 was 12% higher than in the previous week, presumably resulting from cool weather in the East.
Below-average temperatures are slated to entrench the eastern U.S. through the six- to 10-day and eight- to 14-day periods, outlooks from the National Weather Service show. Cool conditions in heat-consuming markets could force a more significant ramp up in heating demand.
A further increase in demand for natural gas in the coming weeks could impact natural gas storage injections in the coming weeks, after a reported 74-Bcf build to stocks that beat consensus expectations for the week to April 21.
Ahead of the April 27 release of storage data from the EIA, the consensus estimate for the figure was pegged at 68 Bcf. In addition to beating the outlook, the 74-Bcf build was above the prior-week, five-year average and year-ago builds, which came in at 54 Bcf, 57 Bcf and 64 Bcf, respectively.
The build brought total U.S. working gas supply to 2,189 Bcf, or 358 Bcf below the year-ago level and 299 Bcf above the five-year average storage level of 1,890 Bcf.
The report implied a weakening of the supply demand balance that could be reversed should natural gas demand continue to climb, while production that averaged 74.8 Bcf/d for the second consecutive week in the week to April 26, continues at a reduced level.
Natural gas production, however, could begin to improve as the U.S. added another 13 rigs to the total number of oil and gas rigs operating in the U.S, according to the latest data from Baker Hughes Inc. released April 28.
Oil rigs were up nine on the week to a total of 697 rigs and gas rigs were up four on the week to 171, for a total of 870 rigs operating in the U.S., compared to 420 rigs a year earlier.
Improved production could counter the heating demand from the lingering cold in the Northeast and allow storage injections to continue at a robust pace, while improving the storage outlook when cooling demand kicks into higher gear in the summer.
Trades in the day-ahead market were done for May 1 delivery after the market moved a three-day Friday-through-Sunday product a day earlier to accommodate the start of the fresh month at the start of the fresh week.
Strong demand outlooks supported gains for the Monday product moved at most key delivery locations.
At Transco Zone 6 NY a gain of nearly 15 cents drove the index near $2.70, while Tetco-M3 traded nearly 20 cents higher to an index atop $2.65. Henry Hub trades were nearly 10 cents higher to an index above $3.15, Waha gained about 5 cents to an index near $2.80 and Chicago gained about 1 cent to an index near $2.95. At the SoCal Border, trades were about 5 cents higher to an index atop $2.80 while PG&E Gate added about 10 cents to an index atop $3.35.
Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power, natural gas and coal index prices, as well as forwards and futures, visit our Commodities Pages.