The NYMEX April natural gas futures contract settled at $1.639/MMBtu Thursday, down 3.9 cents, as a storage withdrawal that was larger than analyst expectations failed to push the prompt-month price higher.
Thursday's close was the lowest a prompt-month contract has settled since reaching $1.628/MMBtu on February 26, 1999.
"Front-month prices are still in the red after another withdrawal that added to the storage surplus, but longer-term futures are moving higher because the report was higher than expectations and showed a decent baseline of power generation demand," Aaron Calder, an analyst with Gelber & Associates, said in a market note.
Calder added that early projections are calling for a hotter-than-normal summer, and an early start to the heat could provide some upward pressure for the May and June contracts.
The US Energy Information Administration reported a storage withdrawal of 48 Bcf for the week ending February 26, bringing gas inventories to 2.536 Tcf.
That came in above the consensus estimate of a pull between 37 Bcf and 41 Bcf from analysts surveyed by Platts.
The April contract had been trading about 4 cents lower than Wednesday's close shortly before the storage data release.
While beating expectations, the withdrawal was well below the 227-Bcf drawdown reported at this time in 2015 and the 137-Bcf five-year average withdrawal, according to EIA data.
"Last week's mild weather (32% fewer heating degree days than normal) combined with a forecast for more warm weather likely leaves withdrawal season storage exit at 2.4 Tcf, a level in line with 2012 10-year record highs," Tudor Pickering Holt analysts said in a market note. "The 2012 storage overhang cleared up over the course of that year and the same will happen this year."
The National Weather Service's latest eight- to 14-day forecast showed a higher likelihood of above-normal temperatures east of the Rocky Mountains.
The April contract traded between $1.633 and $1.695/MMBtu during the session.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EST (2400 GMT).
