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Market Summary: 17 Mar – 21 Mar 2014

The following is a summary of last week’s market activity and the market outlook:

  • Natural gas futures experienced a steady slide last week across all terms (near-term decreasing more than the long-term). The Prompt Month broke below our technical support level of $4.45 late in the week, with the next level being in the $4.20 area. The Prompt Month closed at $4.31 (down 12 cents), the 12-month Strip closed at $4.50 (down 9 cents), and Calendars ’15, ’16 and ’17 all closed down 4 cents at $4.20, $4.18 and $4.25 respectively.
  • Short-term weather forecasts remain bullish, with much-below temperatures stretching across most of the eastern half of the country, and the storage deficit continues to grow.
  • The EIA reported a withdrawal of 48 Bcf for the week ending March 14, 2014, which was less than the expected (59 Bcf) and much less than last year (74 Bcf) but greater than the five-year average (30 Bcf). Current inventory is 953 Bcf, which is 932 Bcf (49.4%) below last year and 876 (47.9%) below the 5-year average.
  • If the next storage withdrawal is inline with expectations, inventories would equal 847 Bcf at the end of March (more withdrawals are possible, but less likely in April).  This would be the lowest since 2003 (642 Bcf), with a deficit of 967 Bcf over the 5-year average.  To erase this deficit during the April-October injection season, injections would need to exceed the 5-year average by 4.1 Bcf/day.
  • In the short-term, we’re seeing a continuation of Polar Vortex for the 1- to 20-day forecast, with the coldest period in the 1- to 5-day timeframe, while the Southwest remains above-normal.  According to Earthsat, April is expected to be below-normal for the Northern Plains, Midwest, and upper Northeast, with above-normals in the Southeast and Southwest. May is expected to be below-normal in just the upper Midwest, with most of the U.S. at normal temperatures, with the Southeast and Southwest experiencing above-normal temps. The market focus is shifting beyond winter as temperatures moderate.