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January 2018 gas remains elevated on weather support

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January 2018 gas remains elevated on weather support

After settling up 3.6 cents at $3.061/MMBtu on Dec. 1, NYMEX January 2018 natural gas futures extended higher overnight ahead of the Monday, Dec. 4, open, as cold weather in store for the eastern U.S. in the midrange spelled stronger heating demand and larger storage draws in the weeks ahead. At 6:46 a.m. ET, the contract was 3.7 cents higher at $3.098/MMBtu.

The latest National Weather Service forecasts for the upcoming six- to 10-day and eight- to 14-day periods show the country split between below-average temperatures over the bulk of the eastern U.S. and above-average temperatures over a majority of the western U.S., with a band of average temperatures over the west-central U.S. separating the diverging weather patterns.

Colder weather anticipated for major heat-consuming regions in the eastern U.S. should ramp up natural gas demand for heating and accelerate the pace of inventory erosion, following recent lackluster weather-related demand seen to have kept a lid on the rate of weekly draws in the latest storage report week and possibly for the subsequent report period.

Milder weather that drove down demand for natural gas is seen to have encouraged a 33-Bcf drawdown for the week ended Nov. 24 that was a downside miss against consensus estimates and below both the 43-Bcf year-ago pull and the 47-Bcf five-year average withdrawal. It left total working gas stocks at 3,693 Bcf, or 309 Bcf below the year-ago level and 107 Bcf below the five-year average of 3,800 Bcf.

Ongoing demand weakness into the close of November feeds potential for an additional modest storage draw when the next inventory data is released for the week to Dec. 1, as the U.S. Energy Information Administration's latest "Natural Gas Weekly Update" covering the week ended Nov. 29 shows that total U.S. gas consumption was down 6% week on week due to reduced consumption across most sectors amid warmer weather.

Spot gas price activity predominantly unraveled Dec. 1, as traders moved a revised natural gas offering for Saturday-through-Monday flow that was weighed down by the inclusion of the low-demand weekend days.

Among the key delivery locations, Transco Zone 6 NY cash gas prices led the charge lower with an almost 50-cent decline on average to an index at $2.448/MMBtu. Benchmark Henry Hub next-day gas pricing followed with a near 13-cent reduction in trades averaging at $2.837/MMBtu, Chicago hub action shed about 5 cents on the session to average at $2.725/MMBtu and PG&E Gate day-ahead gas price activity faltered by roughly 3 cents to an index at $3.016/MMBtu.

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In regional terms, Northeast spot gas pricing crumbled by nearly 19 cents to an index at $2.634/MMBtu, as Gulf Coast and Midwest day-ahead gas prices retreated by about 7 cents on average to indexes at $2.769/MMBtu and $2.591/MMBtu, respectively. West Coast cash gas price action deflated by almost 10 cents in deals averaging at $2.488/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.