Natural gas futures erase gains after EIA inventory data

Natural gas slipped back into negative daily territory on Thursday after data by the Energy Information Administration showed US natural gas stockpiles fell last week largely in line with expectations. Seasonal weather across the majority of the country continued to weigh on the market.

Natural gas for delivery in April traded 0.11% lower at $2.821 per million British thermal units at 14:42 GMT, having risen to a session high of $2.864 before the reports release. The contract rose by 3.37% on Wednesday after it added little over 2% the prior day, largely erasing Monday’s drop of nearly 5.7%.

The Energy Information Administration reported that US natural gas inventories declined by 198 billion cubic feet in the seven days through March 6th, compared to analysts median estimate of -191 bcf and in the upper limit of the expectations range. This compared to the five-year average withdrawal for the week of 116 billion cubic feet, while stockpiles slid by 189 bcf a year ago.

Total gas held in US storage hubs amounted to 1.512 trillion cubic feet, expanding a deficit to the five-year average of 1.737 trillion to 13.0%, or 225 bcf, from 7.7% a week earlier. Inventories stood at 1.029 trillion a year ago, 46.9% below current levels.

Stockpiles in the East Region fell by 104 bcf to 618 bcf, a 20.8% deficit to the five-year average, while the West Region saw a net withdrawal of 16 bcf to 339, 23.7% above the average. Inventories in the Producing Region dropped by 78 billion cubic feet to 555 bcf and were 18.7% behind the average.

Upside movement remained limited as mild weather across the US curbed heating demand.

According to NatGasWeather.com, natural gas demand in the US will be low-to-moderate compared to normal through March 18th, with a neutral weather trend for the following seven days.

Near-seasonal temperatures have established over the majority of the US, keeping national heating demand curbed. Periods of showers continue over the southern and east-central regions, with the weather system expected to track into the Northeast this weekend, bringing rain, snow and several degrees of cooling.

A strong Canadian front will hit the Great Lakes and Northeast today, pushing highs across New England down into the 20s and 30s, but will fail to infiltrate deeper southward, leaving most high-population cities out of harm’s way. The western and central US, apart from Texas, will remain warmer-than-usual over the next seven days.

Early next week, a fresh cold blast will hit the the northern US, but cooler temperatures will likely fail to push southward, NatGasWeather.com said. As the week progresses, Canadian weather systems will bring rain, snow and below-normal temperatures to the Great Lakes and eastern US, strengthening heating demand enough to keep inventory withdrawals near or slightly above the average. The West will enjoy warm and dry weather, while the South remains near-seasonal or slightly cooler due to periods of showers. The central US will also experience near-seasonal conditions.