NYMEX December natural gas futures were lower Wednesday, Nov. 22, pressured by weather outlooks that imply lackluster heating demand at the onset of the peak winter heating season. Ahead of the Thanksgiving holiday break, options expiration Nov. 27 and the contract's roll off the board Nov. 28, December futures traded a range from $2.958/MMBtu to $3.027/MMBtu and settled 4.9 cents lower on the session at $2.968/MMBtu.
The market was unfazed by a net 46-Bcf withdrawal from natural gas inventories in the Lower 48 during the week ended Nov. 17, reported by the U.S. Energy Information Administration at 12 p.m. ET on Wednesday, a day ahead of usual due to the Thanksgiving holiday.
The drawdown was below the market consensus ahead of the report's release that called for a 54-Bcf drawdown from stocks but compared bullish against the 2-Bcf injection in the corresponding week in 2016 and the 26-Bcf five-year average withdrawal.
The draw brought total U.S. working gas supply to 3,726 Bcf, or 319 Bcf below the year-ago level and 121 Bcf below the five-year average storage level of 3,847 Bcf.
The smaller-than-anticipated withdrawal from stocks kept the market steady to the downside as weather outlooks suggest demand for heating will slacken and correspondingly shift demand for natural gas lower.
Weather forecasts for the midrange period signal losses as they outline a warming trend with only the eastern quarter of the U.S. expected to see below-average temperatures over the six- to 10-day period and only a portion of the Northwest expected to see below-average temperatures in the eight- to 14-day period.
Above-average temperatures in the major heat-consuming regions into early December are capping the upside potential for the market as natural gas inventories should draw down at a slower pace during the onset of what is typically the period of peak demand, and thus, peak withdrawal.
Longer-range weather outlooks also provide little upside support for values as both the National Oceanic and Atmospheric Administration and The Weather Company see mild conditions for much of the country through the three months from December through February.
Expectations for natural gas production to continue breaking monthly records provide additional downside pressure for the market. Following a 1.4% increase in November to 61.70 Bcf/d from the October level of 60.06 Bcf/d, total output of natural gas across seven key shale plays is expected to climb 1.3% in December, the EIA said in the latest installment of the "Drilling Productivity Report."
Traders moved a five-day product at the day-ahead markets Wednesday to accommodate for office closures through the Thanksgiving holiday weekend. Holiday and weekend inclusion combined with moderating weather to deflate demand outlooks and pressure prices.
Transco Zone 6 NY trades were down 5 cents to an index near $3.00, Tetco-M3 slipped nearly 20 cents to an index near $2.65, Henry Hub traded more than 10 cents lower to an index near $2.90, Waha tumbled about 25 cents to an index below $2.45 and Chicago fell about 20 cents to an index near $2.80. At the SoCal Border a loss of nearly 25 cents brought the index near $2.65 while PG&E Gate traded about 5 cents lower to an index near $2.95.
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