After surging 27.9 cents Dec. 21 to finish at $3.542/MMBtu, January 2017 gas extended gains overnight ahead of the Thursday, Dec. 22, open, as traders jockeyed for positions leading up to the midmorning release of the weekly storage data that is poised to show a further acceleration in the rate of inventory erosion. At last glance, January 2017 natural gas was trading at $3.561/MMBtu, up 1.9 cents overnight.
Cold weather that bolstered heating demand is expected to have allowed for an additional triple-digit withdrawal from stocks when the U.S. Energy Information Administration releases its weekly storage report at 10:30 a.m. ET on Thursday.
Estimates for the forthcoming inventory data that will cover the week to Dec. 16 call for a drawdown of anywhere from 195 Bcf to 205 Bcf, with consensus formed at a 200-Bcf pull. This would compare to a 101-Bcf five-year average withdrawal and a 33-Bcf pull during the same week in 2015.
Heating degree day data from the National Oceanic and Atmospheric Administration for the week ended Dec. 17 outlined almost 85% more heating degree days compared to the same week in 2015 and 11.1% more than normal.
Within the range of outlooks, the week's data would exceed even the impressive withdrawal of 147 Bcf outlined in the previous storage data for the week ended Dec. 9 that was the first triple-digit drawdown of the season. That left total working gas stocks at 3,806 Bcf, turning the year-on-year surplus to a deficit of 50 Bcf and shrinking the year-on-five-year-average overhang to 186 Bcf.
A storage pull at consensus would bring total inventories to 3,606 Bcf, widening the year-on-year deficit to 217 Bcf and further trimming the year-on-five-year-average overhang to 87 Bcf.
Yet the uptick in the rate of weekly withdrawals could reverse in the subsequent storage reports, as midrange weather projections reflect predominantly mild weather across major heat-consuming regions, which should reduce heating demand and limit the amount of natural gas pulled from inventories.
In its latest outlooks, the National Weather Service sees above-average temperatures encompassing the bulk of the country's eastern two-thirds and the fringes of the Southwest in the upcoming six- to 10-day period before expanding in scope to overtake more of the Midwest and the Southwest further out to the eight- to 14-day period. Average to below-average temperatures are called only for portions of the Midwest and much of the West.
In cash trading, price activity for natural gas booked for Thursday flow was biased higher in much of the country, in tandem with futures.
Across the key hubs, the charge to the upside was led by Chicago next-day gas pricing that notched an almost 17-cent increase in deals averaging at $3.500/MMBtu. PG&E Gate cash gas price action followed with a 12-cent gain at an index at $3.725/MMBtu, then benchmark Henry Hub spot gas price activity that tacked on roughly 11 cents on the session to average at $3.499/MMBtu. Running against the dominant uptrend, Transco Zone 6 NY hub prices fell by about 35 cents on average to an index at $3.608/MMBtu.
Regional averages were stronger overall. Gains of about 14 cents on average took spot gas price activity to indexes at $3.386/MMBtu in the Midwest and at $3.399/MMBtu on the Gulf Coast. West Coast and Northeast cash gas pricing rose by near 5 cents on average to indexes at $3.215/MMBtu and $4.231/MMBtu, respectively.
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.