January 2017 natural gas futures surged to a two-week high but struggled to hold the upside Thursday, Dec. 22, despite a larger-than-anticipated storage withdrawal reported by the U.S. Energy Information Administration for the week to Dec. 16. After rising to a $3.626/MMBtu high, the front-month stumbled to a $3.507/MMBtu low and settled down 0.4 cent at $3.538/MMBtu.
The U.S. Energy Information Administration reported that a net 209 Bcf was withdrawn from natural gas inventories in the Lower 48 for the week under review that was above the full range of estimates calling for withdrawals spanning 195 Bcf to 205 Bcf, with an average 200-Bcf pull projected. The figure compared to a 101-Bcf five-year average withdrawal and a 33-Bcf pull during the same week in 2015.
The withdrawal, in fact, was the largest pull for the week since 2010, and left the total U.S. working gas supply at 3,597 Bcf, or 226 Bcf below the same week in 2015 and 78 Bcf above the five-year average of 3,519 Bcf.
Despite the widening of the year-on-year storage deficit and the shrinking of the year-on-five-year-average surplus, the market digested the figure and looked again to weather for additional support.
Weather, however, continues to offer little in the way of encouragement as the latest forecasts from the National Oceanic and Atmospheric Administration show above-average temperatures encompassing the bulk of the country's eastern two-thirds and the fringes of the Southwest in the upcoming six- to 10-day period before expanding in scope to overtake more of the Midwest and the Southwest further out to the eight- to 14-day period.
Without ample weather-related demand, the rate of storage erosion is expected to slow and the natural gas supply is expected to remain healthy through the end-of-March, leading into the next injection period.
In day-ahead trade, prices were mostly higher with weather support.
Bucking the dominant uptrend, milder conditions in the Northeast deflated values at Transco Zone 6 NY by about 30 cents to an index below $3.40 and Tetco-M3 slipped about 15 cents to an index near $3.15.
Elsewhere, Henry Hub trades were about 10 cents higher to an index atop $3.55, Chicago gained about 5 cents to an index around $3.45, Waha added about 1 cent to an index around $3.35, SoCal Border trades were about 10 cents higher near $3.50 and PG&E Gate jumped about 5 cents to an index near $3.75.
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