February 2017 natural gas futures were debuting Thursday, Dec. 29, on the negative side of the ledger in profit-taking after gaining sharply alongside the now-expired January 2017 contract that rolled off the board 16.9 cents higher at $3.930/MMBtu. On the heels of a settle up 13.2 cents at $3.898/MMBtu, the fresh front-month contract was last seen 7.3 cents lower at $3.825/MMBtu.
The contract was probing the downside with no fresh support for the move, as market participants brace for another large storage withdrawal from inventories when the U.S. Energy Information Administration releases its report for the week to Dec. 23 at 10:30 a.m. ET this morning.
Analysts and traders surveyed ahead of the report's release anticipate a range of withdrawals from 219 Bcf to 240 Bcf, with the consensus expectation being a storage draw of 231 Bcf, above the previous week's surprise 209-Bcf drawdown and well above the five-year average withdrawal of 80 Bcf and the 50-Bcf drawdown reported for the same week in 2015.
The drawdown will follow the reported net 209-Bcf withdrawal from natural gas inventories during the week ended Dec. 16 that brought the total working gas supply to 3,597 Bcf, or 226 Bcf below the same week in 2015 and 78 Bcf above the five-year average of 3,519 Bcf.
The injection anticipated in this week's data would result in a total working gas supply of 3,366 Bcf. The year-on-five-year-average surplus would turn to a 73-Bcf deficit, while the deficit to the year-ago level would widen to 407 Bcf.
The increased pace of storage erosion shocked the market higher, while weather forecasts remain the major ballast for prices, with midrange weather forecasts suggesting a brief respite from cold across the eastern third of the country in the six- to 10-day period that could help to pull back demand and temporarily return storage withdrawals to more modest levels.
The eight- to 14-day outlook, however, impedes a sustained move to the downside as below-average temperatures will engulf the majority of the country through the period.
After a hint of pressure in the previous session, day-ahead trade could reflect the near-term changes in weather and the lower load anticipated as the New Year's holiday approaches.
Deals done at major hubs for Thursday flow were varied in direction, but the bias remained to the upside. Transco Zone 6 NY trades were 16.6 cents higher to an index at $3.740/MMBtu, while Chicago notched a modest 2.0-cent gain to an index at $3.586/MMBtu, and the Henry Hub added just 0.4 cent to average at $3.708/MMBtu.
Regionally, the Northeast and Gulf Coast managed 0.7-cent and 1.2-cent gains, respectively, to indexes of $4.147/MMBtu and $3.511/MMBtu, while the Midcontinent slumped 2.9 cents to an index at $3.494/MMBtu, and the West slipped 1.8 cents to $3.418/MMBtu.
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, natural gas index prices, as well as forwards and futures, visit our Commodities Pages.