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January 2017 gas futures advance ahead of week's closing session

After ending the prior session down a scant 0.4 cent at $3.538/MMBtu, January 2017 natural gas futures showed an upside bias overnight ahead of the Friday, Dec. 23, open, as traders considered the recent storage data that outlined an impressive pull from stocks alongside revisions to weather forecasts that called for seasonable conditions across key heating regions. At last look, the contract was up 2.1 cents to $3.559/MMBtu on short covering ahead of the extended holiday weekend.

The Dec. 22 storage data from the U.S. Energy Information Administration outlined a net 209-Bcf drawdown from stocks for the week to Dec. 16 that was largest December net withdrawal since record-keeping began in late 1994.

The reported drawdown exceeded the full range of estimates coming into the day that had called for a withdrawal of anywhere from 195 Bcf to 205 Bcf, with consensus formed at a 200-Bcf pull. It was well above both the 101-Bcf five-year average withdrawal and a 33-Bcf pull during the same week in 2015. The week's data left total working gas stocks 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.

Colder weather that drove up heating demand is seen to have allowed for the large storage withdrawal, as heating degree day data from the National Oceanic and Atmospheric Administration for the week ended Dec. 17 outline almost 85% more heating degree days compared to the same week in 2015 and 11.1% more degree days than normal.

Returning seasonable weather over major heat-consuming regions in forecasts looks to drive support for heating demand in the coming weeks, which should allow for additional large withdrawals from stocks in the subsequent inventory reports.

The National Weather Service sees average temperatures overtaking the Northeast, Mid-Atlantic, a large area of the Midwest and parts of the Southwest in the upcoming six- to 10-day period, as below-average temperatures span the upper tier of the Midwest and the Northwest. Above-average temperatures settle over the Southeast, Gulf Coast and a small portion of the Southwest.

Farther out to the eight- to 14-day period, above-average temperatures spread to the Mid-Atlantic, the lower tier of the Midwest and much of the Southwest, as average temperatures linger over the Northeast and shift in scope elsewhere to settle over the upper section of the Midwest and portions of the West. Below-average temperatures shrink in scope to be contained to the Northwest.

Although above-average temperatures expand in forecasts, lingering average temperatures over the key heating regions of the Northeast and Midwest suggest seasonable weather that should keep heating requirements supported.

In cash trade, supportive weather encouraged gains to prevail in price activity for natural gas moved for Friday flow.

Across the major delivery locations, the charge higher was led by benchmark Henry Hub day-ahead gas price action that added near 8 cents on the session to average at $3.580/MMBtu. PG&E Gate cash gas pricing followed with a better-than-4-cent increase in deals averaging at $3.768/MMBtu, then Chicago hub activity that advanced by roughly 3 cents to an index at $3.534/MMBtu. Running against the dominant uptrend, Transco Zone 6 NY spot gas prices tumbled by almost 30 cents on average to an index at $3.309/MMBtu.

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Regionally, Gulf Coast next-day gas pricing climbed by around 6 cents to an index at $3.461/MMBtu, as West Coast spot gas price activity tacked on about 8 cents to average at $3.299/MMBtu. Midwest cash gas price action notched a near 2-cent uptick in trades averaging at $3.407/MMBtu, as Northeast day-ahead gas prices rose by almost 27 cents on average to an index at $4.497/MMBtu.

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Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power and natural gas index prices, as well as forwards and futures, visit our Commodities Pages.