After ending the prior session up 5.6 cents at $2.828/MMBtu, NYMEX January 2018 natural gas futures unraveled overnight but regained much of the loss ahead of the Tuesday, Dec. 12, open, as traders considered mixed weather expectations and bearish storage prospects.
At 7:35 a.m. ET, NYMEX January 2018 natural gas futures were trading 0.7 cent lower at $2.821/MMBtu after covering a range of $2.798/MMBtu to $2.844/MMBtu.
"The market remains in an uncertain state as there has still not been a sustained weather pattern in either direction since the start of the official winter heating season in October," Energy Management Institute principal Dominick Chirichella said in a Dec. 11 note to clients. "Until there is sustained cold pattern engulfing the major Nat Gas consuming regions of the country Nat Gas prices will continue to trade in a choppy trading pattern."
Changing weather in the latest forecast maps from the National Weather Service support the choppy trading pattern for gas futures.
Above-average temperatures are called for the bulk of the country in the six- to 10-day period but just across the southern tier of the U.S. in the eight- to 14-day period. Average to below-average temperatures contained to the Northeast, Mid-Atlantic, a portion of North Carolina and the fringes of the east-north-central U.S. in the shorter-range view expand to overtake the northern tier of the U.S. in the longer range.
While seasonable to colder-than-normal winter weather in store for portions of the East and the northern U.S. spells elevated natural gas demand for heating in the coming weeks, warmer conditions elsewhere in the country look to keep a lid on weather-related demand support.
"This week's projection of the weekly inventory snapshot is also not providing much support as it is projected to show a net withdrawal that is about half of last year's level for the same week as well as below the five-year average," Chirichella said.
Estimates for the forthcoming storage data due out Dec. 14 that will cover the week ended Dec. 8 suggest a drawdown of anywhere from the high 40s Bcf to the low 70s Bcf, marking the reprise of withdrawals from stocks but still remaining well below average as it would compare to a 132-Bcf year-ago pull and the 78-Bcf five-year average draw.
The week's data would follow the atypical 2-Bcf injection outlined by the U.S. Energy Information Administration for the week ended Dec. 1 that was the first December net build since 2012. It defied both the 69-Bcf five-year average draw and a 43-Bcf pull seen in the corresponding week in 2016. Total working gas stocks currently sit at 3,695 Bcf, or 264 Bcf below the year-ago level and 36 Bcf below the five-year average of 3,731 Bcf.
In cash trade, price action for natural gas booked for Tuesday flow was generally stronger, in tandem with futures.
Among the key hubs, the uptrend was led by Chicago day-ahead gas prices that climbed by roughly 15 cents on average to an index at $2.781/MMBtu. PG&E Gate spot gas pricing followed with a near 11-cent gain in transactions averaging $2.974/MMBtu, then benchmark Henry Hub next-day gas price activity that tacked on almost 3 cents to average $2.809/MMBtu. Bucking the broad advance, Transco Zone 6 NY hub action tumbled by around 29 cents to an index at $3.781/MMBtu.

On a regional basis, Midwest cash gas price activity logged an almost 8-cent uptick in deals averaging at $2.629/MMBtu, as West Coast next-day gas prices rose by about 15 cents on average to an index at $2.649/MMBtu. Gulf Coast day-ahead gas price action was lifted by roughly 4 cents to an index at $2.773/MMBtu, as Northeast spot gas pricing added approximately 2 cents on the session to average at $3.608/MMBtu.

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