Trading from $2.643/MMBtu to $2.717/MMBtu on the session, NYMEX January 2018 natural gas futures eased Thursday, Dec. 14, amid profit taking even after the release of a larger-than-expected withdrawal from storage.
The U.S. Energy Information Administration reported a net 69 Bcf was pulled from natural gas storage in the Lower 48 during the week ended Dec. 8, leaving total U.S. working gas supply at 3,626 Bcf, or 201 Bcf below the year-ago level and 27 Bcf below the five-year average storage level of 3,653 Bcf.
Although analysts and traders surveyed had anticipated a 60-Bcf pull from storage for the period, the latest figure still came in below a 132-Bcf year-ago pull and the 78-Bcf five-year average withdrawal.
"The 69 bcf draw was more than expected and a significant improvement over the prior week's 2-bcf net injection. However, it was still less than the 78-bcf five-year average level and so somewhat bearish on a seasonally adjusted basis. The data does provide at least minor reassurance that the baseline supply/demand balance has not continued to weaken," Tim Evans, energy analyst with Citi Futures, wrote Dec. 14 to clients.
While the natural gas storage situation remains healthy overall, the latest weather forecasts show colder conditions are likely to expand across much of the United States by the end of December, which are likely to increase heating demand.
According to the National Weather Service, normal to below-normal temperatures are eyed for much of the country during the six- to 10-day period. Above-average conditions are projected for parts of the Mid-Atlantic, the Southeast and parts of Texas and the Southwest.
In the eight- to 14-day time frame, the agency is calling for widespread below-normal temperatures, with normal to above-average readings seen in much of the Southeast, parts of the Mid-Atlantic, the Northeast and a very small swath of the central U.S. as well as the Southwest and southern California.
The arrival of colder weather over a majority of the country by month's end should ramp up natural gas demand for heating in the weeks ahead, which should accelerate the pace of storage erosion going forward.
Day-ahead natural gas prices were mixed Thursday at major consuming hubs across the country.
Volatility continued in the Northeast markets. Gas at the Transco-NY Zone 6 market ran near an average of $5.80/MMBtu, soaring more than $1 on the day. Spot product at the Tetco M3 market was priced near $2.85/MMBtu, down about 60 cents
In the producing region, gas at the benchmark Henry Hub for Friday flow was seen near $2.65/MMBtu, down more than 5 cents.
In the Midwest, Chicago spot gas was priced around $2.60/MMBtu, down about 1 cent.
On the West Coast, PG&E Gate gas for Friday flow was assessed around $2.85/MMBtu, easing about 5 cents. Gas at the SoCal Border came in near $2.90/MMBtu, up 5 cents in value.
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