NYMEX January 2018 natural gas struggled to hold gains in the week's closing session. While advancing early to a $2.820/MMBtu high, the contract finished just 0.9 cent higher at $2.772/MMBtu.
The working natural gas supply improved by 2 Bcf in the week to Dec. 1 to total 3,695 Bcf, which is 36 Bcf less than the five-year average and 264 Bcf less than 2016 at this time. This was the first time since Dec. 7, 2012, that working gas stocks posted a net increase on a national level in December.
The healthy working gas inventory is heaping downside pressure on the market, limiting the impact of cold weather on the natural gas price.
Midrange weather outlooks call for below-average temperatures in the major heat consuming Northeast and Midwest regions through mid-December.
The six- to 10-day outlook from the National Weather Service shows below-average temperatures across the eastern quarter of the U.S., above-average temperatures reaching beyond the western half of the country and a swath of average temperatures separating the two areas of extremes.

In the eight- to 14-day period, the below-average temperatures shift to overtake the Northeast, a portion of the mid-Atlantic and a small area of the north-central U.S., while the swath of average temperatures shifts to overtake portions of the mid-Atlantic, Midwest and north-central regions, separating the below-average temperatures from the above-average temperatures expected to grip the remainder of the country.

Cold in the current week to Dec. 8 and the extended cold forecast through Dec. 15 suggest strong heating demand that should negatively impact the natural gas supply in the weeks ahead.
Longer-range, however, forecasts suggest moderating temperatures that should drive a pullback in demand and once again minimize storage erosion.
"Prices will continue to recede if winter like weather does not arrive and remain in play in the main Nat Gas consuming regions of the country. Currently it looks like the cold weather is not yet ready to move across the country and remain in place long enough to push total Us Nat Gas inventories strongly lower," Energy Management Institute principal Dominick Chirichella said.
Alongside lackluster demand, even as total dry natural gas production decreased by 1% in the review week to Dec. 6 compared with the previous report week, a rising rig count implies strong production.
The U.S. total rig count was up two in the week to Dec. 8 at 931, which is 307 rigs more than the previous year. Oil rigs accounted for the total increase, rising to 751 rigs, 243 above the year-ago level, while gas rigs held steady at 180, about 55 rigs above the same period in 2016.
The natural gas market will benefit from strong production from gas rigs as well as residual natural gas garnered during the oil recovery process.
In day-ahead trade, prices were biased to the downside on lower demand driven by weekend inclusion as traders moved a three-day product for Saturday through Monday.
Cold in the Northeast continued to support price gains. At Transco Zone 6 NY trades were better than 20-cents higher to an index atop $4.15, while Tetco-M3 added nearly 30 cents to an index near $2.95. Elsewhere, Henry Hub traded about 5 cents lower to an index near $2.75, Waha added about 5 cents to an index near $2.55, with cold weather supportive, while Chicago gave back about 5 cents to an index below $2.65. Price direction varied at hubs in the West as SoCal Border deals fell about 15 cents to an index below $2.75, while PG&E Gate gained about 1 cent to an index atop $2.85.
