Natural gas prices remain in their steep price decline as the prospects for a large gas surplus heading into the spring is keeping buying interest at bay.
In its Weekly Gas Storage Report, the U.S. Energy Information Administration (EIA) said 47 billion cubic feet of gas was withdrawn from storage during the week of March 24, below pre-report estimates for a draw of 55 billion cubic feet. However, last week draw was above the same-week, five-year average of a 17 billion-cubic-feet draw.
U.S. natural gas in storage now totals 1.853 trillion cubic feet, which is 31.3% above last year and 21% above the five-year average.
The April natural gas contract, which expired last week, settled below the psychologically important $2 per million Btu price level demonstrating the effects of lackluster demand and few signs of producers curtailing production despite sharply lower prices.
Natural gas production has generally held steady around 100 Bcf per day the past week, which is near record production.
In its latest eight- to 14-day forecast, the Climate Prediction Center has most of the Western half of the U.S. seeing below-normal temperatures from April 6–12. Much of the Eastern U.S. is expected to see near normal temperatures, with only the Southeast, and the southernmost portion of the Gulf Coast region expected to see above-normal temperatures.
If these forecasts hold, we may see additional small storage draws in early April, which could reduce the extent of the current gas surplus.
In other natural gas-related news, the Freeport LNG facility in Texas has seen its liquefaction operations returning to normal capacity following the shutdown last June due to a fire that damaged the facility.