Welcome to the weekly natural gas storage report edition of Natural Gas Daily!
EIA reported a storage draw of 149 Bcf for the week ending March 1. This compares to the -155 Bcf we projected and consensus average of -149 Bcf. The -149 Bcf was higher than the five-year average of -129 Bcf and higher than last year's -57 Bcf.
For the week ending March 8, we have a storage draw of -195 Bcf. EOS is forecasted to be 1.097 Tcf down from 1.184 Tcf last week.
As you can see from the chart above, our article a week back stated that mid-March would see early spring-like conditions were correct. Except that it's only expected to last two days (haha).
HDDs spike back higher after the brief warm spell as the Northeast shows another cold blast hitting, following the polar vortex just this past week.
As a result, our EOS forecast is now down to 1.097 Tcf. Our latest view on April is that $2.9 will remain the price ceiling given that lower 48 production reached ~89 Bcf/d just a week earlier. This will keep prices range bound between $2.7 to $2.9, so knowledgeable traders could use this range to trade both long and short. Given that April contracts already are priced at $2.86/MMBtu, the trade is to go bearish when the weather models turn warmer than normal. This is just the nature of the shoulder season.
In addition, ECMWF-EPS long range indicated that early April will be warmer than normal, so combine that with the price band outlook, and we may take another crack at a short position early next week.
For the time being, natural gas storage draws have been revised higher with most of our week-to-week revision concentrated for the March 22 week. EOS is now sub 1.1 Tcf, and the price band is establishing itself.
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