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December gas futures search for direction amid dueling fundamentals

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December gas futures search for direction amid dueling fundamentals

Following a 3.0-cent decline in the prior session to finish at $3.017/MMBtu, NYMEX December natural gas futures were near unchanged overnight ahead of the Wednesday, Nov. 22, open, as supportive storage expectations ran counter to bearish weather-related demand prospects. At 7:15 a.m. ET (1215 GMT) the contract was 2.2 cents lower at $2.995/MMBtu while trading a range from $2.993/MMBtu to $3.027/MMBtu.

Market participants anticipate a large withdrawal from stocks when the U.S. Energy Information Administration releases its next weekly storage data at noon E.T. on Wednesday, a day earlier than usual due to the Thanksgiving holiday. Estimates for the forthcoming inventory report that will cover the week ended Nov. 17 call for a drawdown of anywhere from 48 Bcf to 63 Bcf, with consensus formed at a 54-Bcf withdrawal. This would compare to a 2-Bcf injection in the corresponding week in the prior year and a 26-Bcf five-year-average withdrawal.

Natural gas inventories began drawing lower during the week ended Nov. 10, for which the EIA outlined an 18-Bcf draw that took total working gas stocks to 3,772 Bcf, or 271 Bcf below the year-ago level and 101 Bcf below the five-year average of 3,873 Bcf.

A pull from stocks at consensus would leave overall inventories at 3,718 Bcf, or 129 Bcf below the five-year average and 327 Bcf below the year-ago level.

Colder weather that prompted stronger heating demand is seen to have allowed for the first storage withdrawal of the season and the anticipated drawdown, but weather in store that looks to sap heating demand suggests a slowdown in the pace of storage erosion going forward.

The National Weather Service sees above-average temperatures blanketing the bulk of the country through both the upcoming six- to 10-day and eight- to 14-day periods, leaving average to below-average temperatures contained to the Eastern Seaboard in the shorter-range view and to the Northwest further out.

A warming trend into early December should keep heating demand at bay and limit the amount of natural gas drawn from inventories.

In cash action, the day-ahead natural gas offering had a predominantly strong showing Tuesday on the back of expectations for elevated demand at midweek.

Among the key hubs, Transco Zone 6 NY spot gas prices led the uptrend with a 10-cent gain on average at an index at $3.050/MMBtu, followed by Chicago next-day gas pricing that rose by near 2 cents on the session to an index at $3.049/MMBtu and benchmark Henry Hub cash gas price action that notched a 1-cent uptick in deals averaging at $3.052/MMBtu. Bucking the wider advance, PG&E Gate hub activity deflated by almost 7 cents to average at $3.025/MMBtu.

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On a regional basis, Northeast day-ahead gas pricing was lifted by about 6 cents to an index at $2.988/MMBtu, while Midwest and Gulf Coast next-day gas prices were bolstered by roughly 2 cents on average to indexes at $2.876/MMBtu and $2.959/MMBtu, respectively. West Coast spot gas price action slumped by near 5 cents against the broad uptrend to average at $2.650/MMBtu.

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Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power and natural gas index prices, as well as forwards and futures, visit our Commodities Pages.