James Hyerczyk
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Natural Gas

Natural gas futures closed lower for a third session on Friday as weather worries and Thursday’s bearish government storage report weighed on prices. Losses may have been limited by an optimistic outlook for LNG exports and a robust U.S. jobs report that indicated the economic recovery may be picking up momentum.

On Friday, May natural gas futures settled at $2.739, down $0.042 or -1.51%.

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Short-Term Weather Forecast

Bespoke Weather Services said comfortable weather and light heating demand are to permeate most of the Lower 48 in the coming week.

Friday forecasts included “incremental warmer changes, as mid to late next week moves even warmer, not far from record warm levels” in terms of gas-weighted degree days, the firm added. Conditions “should make it more difficult for weather to really move the needle” as far as “overall sentiment in the natural gas market.”


US Energy Information Administration Weekly Storage Report

The EIA on Thursday reported a 98 Bcf withdrawal from U.S. gas stocks for the week-ended February 26. Analysts were looking for a triple digit pull, so the report was deemed disappointing.

Ahead of the EIA report, a Bloomberg survey called for a median draw of 140 Bcf. Analysts polled by Reuters were looking for a median estimate of 135 Bcf and a Natural Gas Intelligence (NGI) model predicted a 135 Bcf withdrawal.

Working gas in storage was 1,845 Bcf as of Friday, February 26, 2021, according to EIA estimates. This represents a net decrease of 98 Bcf from the previous week. Stocks were 277 Bcf less than last year at this time and 178 Bcf below the five-year average of 2.023 Bcf. At 1,845 Bcf, total working gas is within the five-year historical range.

Liquefied Natural Gas Exports Continue to Recover from Texas Freeze

LNG export levels on Friday topped 11 Bcf, hanging near record levels after rebounding from the interruptions imposed by the Arctic storm and frigid temperatures that derailed the Texas energy sector in February, Natural Gas Intelligence (NGI) reported. LNG feed gas volumes had plunged to near 1 Bcf at the mid-February low.

LNG exports have “fully recovered from freeze-off disruptions in February and remain priced to operate near capacity throughout 2021 and beyond,” Goldman Sachs analysts said Friday.

Strong US Jobs Report Points toward Higher Energy Demand

U.S. jobs increased more than expected in February amid falling new COVID-19 cases, quickening vaccination rates and additional pandemic relief money from the government, putting the labor market recovery back on firmer footing and on course for further gains in the months ahead.

Non-Farm Payrolls surged 379,000 jobs last month after rising 166,000 in January, the Labor Department said on Friday. Economists were looking for an increase of 210,000 jobs.

The report was a strong indication that the economy was moving closer to pre-pandemic levels, leading to higher expectations for stronger demand for energy.

For a look at all of today’s economic events, check out our economic calendar.

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