After a settle up 6.9 cents at $2.667/MMBtu ahead of the long Christmas holiday weekend, NYMEX January 2018 natural gas futures extended gains overnight leading up to the Tuesday, Dec. 26, open, as cold weather forecast for key heating regions spelled stronger demand and larger draws from storage in the weeks ahead. At 6:58 a.m. ET, the contract was 9.7 cents higher at $2.764/MMBtu.
The latest National Weather Service projections for both the six- to 10-day and eight- to 14-day periods show below-average temperatures gripping the bulk of the country's eastern two-thirds, leaving average temperatures contained to a narrow swath along the west-central U.S. and above-average temperatures confined to the West.
Colder weather on tap for the central and eastern U.S. should boost heating demand in the residential and commercial sectors and keep natural gas consumption elevated, potentially extending the recent acceleration in the pace of storage erosion.
Natural gas inventories notched their first triple-digit withdrawal of 182 Bcf during the week ended Dec. 15, as colder weather across the contiguous U.S. bolstered demand for natural gas, especially across the power and residential/commercial sectors, the U.S. Energy Information Administration said.
The reported storage drawdown was an upside miss against the full range of estimates coming into the day and the 125-Bcf five-year average pull, even as it trailed the 200-Bcf prior-year draw. It left total working gas stocks at 3,444 Bcf, or 183 Bcf below the year-ago level and 84 Bcf below the five-year average of 3,528 Bcf.
Spot gas price action was choppy with an upside bias on Dec. 22, as traders moved a revised natural gas offering for Saturday-through-Tuesday flow to accommodate office closures through the Christmas holiday weekend. Prospects of weather-related demand support collided with the inclusion of the low-demand weekend and holiday in the parcel.
Looking at the key hubs, a roughly 82-cent increase steered Transco Zone 6 NY cash gas pricing to an index at $3.287/MMBtu, as a near 14-cent gain drove Chicago day-ahead gas price activity to an index at $2.674/MMBtu. By contrast, a less-than-1-cent loss on average nudged benchmark Henry Hub and PG&E Gate spot gas prices to indexes at $2.630/MMBtu and $2.848/MMBtu, respectively.
In regional terms, Northeast next-day gas price action tacked on about 28 cents on the session to average at $3.617/MMBtu, as Midwest spot gas pricing logged an almost 9-cent uptick in transactions averaging at $2.555/MMBtu. Gulf Coast cash gas prices rose by around 6 cents on average to an index at $2.558/MMBtu, as West Coast day-ahead gas price activity retreated by near 12 cents against the wider regional uptrend to an index at $2.529/MMBtu.
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