The NYMEX April natural gas futures contract settled at $2.704/MMBtu Monday, up 0.9 cent, as a colder weather outlook and low storage levels offset continued strong production and slowing demand.
The April front-month contract has trended up since the March contract expired February 26, rising 6.5 cents, or 2.5%, since then.
The recent uptick in prices appears to be the market "trying to stabilize and pick its head up," said Gene McGillian, senior analyst at Tradition Energy, but every time the market gets some selling pressure "it does not last long."
"US production levels are going to increase" in the coming weeks and months, but the market is still looking for its "next real driver" and, as of now, "has not found it," McGillian added.
According to the US Energy Information Administration, total national stocks are currently at an estimated 1.682 Tcf, an 18.1% deficit to the five-year average.
Potentially driving prices up, in tandem with low storage levels, is the potential for cold weather in the coming weeks. The most recent eight- to 14-day outlook from the National Weather Service calls for colder-than-average weather across the West Coast, Southeast and demand centers of New York and Chicago.
The recent price rise for the April front-month contract may be short-lived, as continued robust production is quickly catching up to falling US demand.
US demand is expect to average 77.8 Bcf/d over the next eight- to 14-day period, a 6.1 Bcf/d drop from the 83.9 Bcf/d average expected over the next seven days, according to S&P Global Platts Analytics.
Dry gas production has continued strong, as over the next eight to 14 days dry production is estimated to average 77.7 Bcf/d, only a 200-MMcf difference from the 77.9 Bcf/d averaged over the previous seven days, according to Platts Analytics.
The NYMEX settlement is considered preliminary and is subject to change until a final settlement price is posted at 7 pm EST (2400 GMT).
