Moderating temperatures mark the approach of spring, prices drop. Natural gas prices at almost all trading locations fell Wednesday to Wednesday as temperatures climbed to normal or near-normal levels, after a chilly start to the week. At most locations, prices fell through Tuesday, before rebounding slightly in trading on Wednesday, offsetting some of the report-week losses. The Henry Hub spot price opened the report week at $3.26/MMBtu and lost 53¢ through Tuesday, before gaining 6¢ in trading on Wednesday to end the week at $2.79/MMBtu.

Northeast posts overall price declines. At the Algonquin Citygate, which serves Boston, prices started the week $13.98/MMBtu on Wednesday, fell to $3.07/MMBtu on Tuesday, and ended the week at $4.97/MMBtu. Expected higher power demand in New England on Thursday, as reported by the New England Independent System Operator, supported the $1.97/MMBtu increase in gas prices in trading yesterday. Similarly, with winter weather at the start of the report week, prices at the Transcontinental Zone 6 trading point for delivery into New York City began the week relatively high at $15.83/MMBtu, before closing at $2.75/MMBtu yesterday.

With forecasts that called for warmer weather through the week, prices also fell significantly at locations in the Mid-Atlantic and Midwest. For example, prices at Transcontinental Zone 5, with service into the Mid-Atlantic, fell $11.67, to end the week at $2.79/MMBtu. At the Chicago Citygate, the natural gas price dropped more than $2 from $4.98/MMBtu last Wednesday to $2.75/MMBtu yesterday.

Marcellus-area prices remain low. Prices at several trading locations in the Marcellus area were among the few that increased this week. Despite this, prices in the Marcellus remain the lowest in the country. At Tennessee's Zone 4 trading region, which represents Marcellus deliveries on Tennessee's pipeline system, prices began the week at $1.30/MMBtu, dropped 10¢ to $1.20/MMBtu on Friday, before ending the week up at $1.40/MMBtu. Prices on Transco's Leidy Line also ended the report week at $1.40/MMBtu, an increase of 2¢ Wednesday to Wednesday. Prices at Dominion South, which serves customers in portions of Pennsylvania, Ohio, Maryland, West Virginia, and Virginia, started the week relatively higher than other Marcellus locations. Unlike the other Marcellus locations, Dominion South had an overall decline for the report week, closing the week at $1.67/MMBtu.

Nymex prices increase. At the Nymex, the near-month April contract increased this week from $2.769/MMBtu last Wednesday to $2.824/MMBtu yesterday. Supporting this increase were expectations of a report of a larger-than-normal storage withdrawal. The 12-month strip (the average of the 12 contracts between April 2015 and March 2016) increased from $2.919/MMBtu last Wednesday to $2.952/MMBtu yesterday.

Supply declines slightly. Total natural gas supply declined 0.1% from last week. As temperatures moved closer to normal levels, imports of natural gas from Canada declined 5.2% from the previous week, with imports in all regions dropping. Sendout of LNG also declined from last week. The decline in imported gas was offset by a week-over-week 0.6% increase in dry gas production. Dry gas production for the report week is 8.7% greater than the same week last year.

Consumption falls below supply in the second half of the report week.Led by declines in the residential and commercial sectors, consumption continues to fall. Since March 8, supply has exceeded consumption, the first multiday period that this has occurred since late December 2014. Total domestic consumption fell 17.5% week over week, but was nearly 10% greater than the same week last year. Residential and commercial consumption fell 28.5% from last week, with consumption moving lower through the report week. Industrial consumption declined 5.3%. Overall consumption of gas for electric power generation (power burn) fell 3.9%, but there were some regional variations. In particular, power burn increased in the Midwest by 13.4%.