By Barani Krishnan
biedexmarkets.com — In the dying days of winter, forecasts are still coming in for some cold here and there. But against the intimidating storage level for the fuel, the market is barely giving gas bears the chill.
The front-month contract on the New York Mercantile Exchange’s Henry Hub settled at $2.338 per mmBtu, or metric million British thermal units — down 17.6 cents, or 7%.
A mostly warm 2022/23 winter has led to considerably less heating demand in the United States versus the norm, leaving more gas in storage than initially thought.
Responding to the warmth and lackluster storage draws, gas prices plunged from a 14-year high of $10 per mmBtu in August, reaching $7 in December before trading mostly at mid-$2 levels over the past month.
stood at a total 1.972 tcf, or trillion cubic feet, as of March 10 — up 36% from the year-ago level of 1.451 tcf and 24% higher than the five-year average of 1.594 tcf, the EIA, or Energy Information Administration, reported.
That balance was after another unimpressive weekly drawdown of just 58 bcf, or billion cubic feet, from storage versus forecasts for a 62 bcf deficit and the previous week’s drop of 84 bcf.
Analysts doubted that weekly draws of gas in the near term will make a measurable dent in storage to push prices up.
“With around 3 weeks left in the withdrawal season and current inventories of 1.97 tcf, the remaining withdrawals will have to average around 60 bcf, much higher than expectations,” analysts at Houston-based energy markets consultancy Gelber & Associates said in a note.
Weather forecasts as of Friday morning were calling for heavy snow across portions of the central plains and upper US Midwest, Gelber said, adding that a winter storm was likely to linger through Friday and Saturday but not expected to cause disruptions to natural gas production.
“Currently, it seems that the market may have a hard time getting down to 1.8 Tcf carry out, even with some cold,” the Gelber note added.