22 April 2014, News Wires – US natural gas futures ended nearly 1% lower on Monday, unable to extend last week’s rally that was spurred by the second consecutive bullish weekly storage report.
The front-month contract touched a two-month high early in the session on concerns that storage may not fully be refilled before next winter and forecasts for cold weather that will boost some late-season heating demand, further limiting upcoming storage injections, Reuters reported.
Front-month natural gas futures on the New York Mercantile Exchange hit a high of $4.789 per million British thermal units overnight, the highest since 26 February, then slid to settle at $4.697, down 4.4 cents, or 0.9%.
The May contract rose nearly 5% on Thursday, climbing above technical resistance at $4.70 per MMBtu, and markets were closed on Friday in observance of the Good Friday holiday.
Profit-taking above $4.70 and milder overall forecasts were clashing with the bullish fundamentals, said Aaron Calder, senior market analyst with Gelber & Associates in Houston.
“Extended heating demand in the Northeast will continue to affect the storage balance,” Calder said in a note to clients. “The market is losing time” to rebuild storage, currently about 54% below the five-year average.
Nymex gas contracts for the balance of the year eased 3 cents to $4.75 per MMBtu, according to Reuters data.
Gas futures for the full-year 2015 eased 1 cent to $4.39 per MMBtu while 2016 slipped 3 cents to $4.24 per MMBtu, according to Reuters data.
Last week, the US Energy Information Administration reported that gas in storage rose 24 billion cubic feet in the week to 11 April, below analysts’ expectations of a 34-Bcf injection.
After the harsh US winter this year that saw record levels of heating demand, gas in storage is now at 850 Bcf, holding at the lowest level for this time of year since 2003.
Furthermore, cold temperatures, enough to boost late season heating demand, are forecast for the Midwest and Northeast in late April and early May, meteorologists at Commodity Weather Group in Bethesda, Maryland, said in a report on Monday.
“From a national perspective, there are still more normal heating degree days than cooling degree days in late April and early May, so this bigger cool air outbreak can push total degree days to above normal levels,” the forecasters said.
In the cash market, rising prices for gas boosted wholesale power prices across most of the country.
Next-day gas at Henry Hub, the benchmark US supply point in Louisiana, jumped 20 cents to average $4.77 per MMBtu on the IntercontinentalExchange.
In New York, next-day gas rose 6.4 cents to average $4.24 per MMBtu.
Chicago gas climbed 17 cents to average $4.78 per MMBtu.