GAS PRICES: ABOVE $3,05
PLATTS - The NYMEX April natural gas contract continued to march higher Tuesday, climbing 5.2 cents to settle at $3.093/MMBtu on a tightening supply-demand balance characterized by strong LNG feedgas deliveries, March demand above year-ago levels and a 2.8 Bcf/d year-on-year dip in production.
"Late season cold strengthened the heating demand and LNG exports revived," helping to provide support to a sustained recovery of the prompt-month contract throughout March, Viraj Sawant, energy market analyst with Gelber & Associates stated, echoing the tightening supply-demand balance.
Total US demand for March to date maintains a 5.5 Bcf/d margin above 2016 levels, reaching an average around 82.3 Bcf/d. Total US dry gas production has dipped 2.8 Bcf/d from a year ago to reach a March to date average of 70.8 Bcf/d, resulting in a tighter supply-demand balance.
LNG feedgas has been a key outlet for US natural gas production during an otherwise lackluster winter in the continental US, with feedgas to Sabine Pass reaching an average of 1.8 Bcf/d in 2017, topping out at a daily record of 2.4 Bcf/d on March 14.
As the market moves toward the final weeks of winter, storage inventories will weigh heavily on the movement of the prompt month as it becomes clearer the margin of overhang stocks will maintain going into injection season.
Preliminary projections for the two upcoming weeks show a combined 208-Bcf withdrawal from storage, possibly providing support to the bulls that storage inventories could trend closer to the five-year average and widen the gap with year-ago levels.
If projections come to fruition, the combined total would greatly outpace historical data, with the five-year averaging totaling a 48-Bcf withdrawal during the corresponding period, and year ago showing a 6-Bcf pull.
The April contract traded in a range of $3.033/MMBtu to $3.113/MMBtu, increasing the week's gains to 14.5 cents after Monday's 9.3-cent jump.
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