-- US natural gas futures were little changed in midday trading on Wednesday as market participants held back ahead of the weekly government storage report due Thursday.
The front-month Henry Hub contract, along with the continuous benchmark, edged up 0.08% to $2.60 per million British thermal units.
Traders are looking to the US Energy Information Administration's inventory release for fresh direction, with the market currently weighed by subdued demand and ample supply, despite a recent, temporary dip in output.
According to Gelber & Associates, US gas production slipped to 107.9 billion cubic feet per day due to maintenance in the Northeast and South Central regions, but is expected to recover to typical levels by next week.
Aegis Hedging said production in the Appalachia Basin fell to its lowest level since the February freeze-offs. But the decline comes amid unseasonably mild shoulder-season temperatures, which have pushed Eastern Gas South cash prices to a six-month low of $1.79/MMBtu.
Expectations for a sizable storage build are also capping upside. Gelber & Associates projects a 48 billion cubic feet injection for the week, significantly above the 16 Bcf increase recorded a year earlier. "That comparison should keep the upside capped and shows the quick return to larger shoulder-season builds," the firm said.
NRG Energy forecasts an even larger 66 Bcf injection for the week ending Apr. 10. If confirmed, inventories would stand 115 Bcf above the five-year average and 113 Bcf higher than the same period last year.
Weather remains a factor. A late-season cool spell is expected to lift residential and commercial demand early next week, though the broader shoulder-season outlook still points to weakening heating demand and limited cooling needs.
Forecasts reintroduced some heating degree days in the 6- to 15-day outlook, Aegis Hedging reported, citing Criterion data.
Liquefied natural gas demand continues to provide a key source of structural support, with feedgas flows holding near 20.0 Bcf per day, Gelber & Associates said.
Despite some supportive elements, the overall balance remains loose. "The result is a market that can react positively to a tighter storage print, but still needs either a stronger weather signal, a sustained supply underperformance, or another leg higher in export demand to break out of the current low-price range," Gelber & Associates said.