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Weekly Energy Market Update March 31, 2014

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Below is the Direct Energy Business Weekly Energy Market Update video for March 31, 2014. We embedded this video right into the blog post, so you don’t have to leave this page to view it. The written summary is still below too.

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

Natural gas futures moved higher last week across short terms while long term prices remained unchanged. 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 relatively bullish, but warmer weather moving in, and the storage deficit continues to grow.

The EIA reported a withdrawal of 57 Bcf for the week ending March 14, 2014, which was more than expected (51 Bcf), much less than last year (90 Bcf), and greater than the five-year average (7 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 in line with expectations, inventories will equal 834 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 cooler weather for the one- to 10-day forecast. 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.  

Posted: March 31, 2014