February 2018 natural gas futures surged in its debut session as the lead contract Thursday, Dec. 28. Gains came early as the market considered cold weather-related demand support, and extended higher following the midmorning release of U.S. Energy Information Administration storage data. Spanning $2.734/MMBtu to $2.945/MMBtu, the contract closed the session 18.2 cents higher at $2.914/MMBtu.
The EIA reported a net 112-Bcf withdrawal from natural gas inventories in the Lower 48 during the week ended Dec. 22 that was slightly above consensus estimates and the five-year average but well below the same week last year.
The market consensus ahead of the report's release called for a 109-Bcf drawdown from stocks, against respective year-ago and five-year average withdrawals of 233 Bcf and 111 Bcf.
The pull brought total U.S. working gas supply to 3,332 Bcf, or 62 Bcf below the year-ago level and 85 Bcf below the five-year average storage level of 3,417 Bcf.
The week's withdrawal was a step down from the 182-Bcf pull reported in the prior week's report and reflected weather that generated 19.2% fewer heating degree days than average and 27.3% fewer than the same period a year earlier.
Cold weather in the current week and forecasts for cold to linger at least through the midrange period in the Northeast and Midwest consuming regions contributed to the market's bullish moves as larger storage withdrawals are expected as a result of the rising demand for heating.
The six- to 10-day weather forecast from the National Weather Service show below-average temperatures across the entire eastern half of the U.S. and across portions of the north central and Northwest. The cold continues to linger across the majority of the country in the eight- to 14-day period although the intensity of the cold softens.
The sustainability of the upside will rest on the longer-range weather outlooks that currently lack support for persistent gains as the National Weather Service and The Weather Co. forecasts point to milder conditions that could put a pin in the ballooning demand for natural gas in the residential and commercial sectors.
Trade in the day-ahead markets continued at elevated price levels supported by frigid cold weather.
Still elevated but coming down off of much higher values, Algonquin Citygates gave back about $5.30 on the session to an index near $19.00, Transco Zone 6 NY fell nearly 95 cents to an index near $15.40 and Tetco-M3 tumbled more than $1.75 to an index near $15.30.
Adding to prior-day gains, Henry Hub traded about 20 cents higher to an index atop $2.95, Chicago climbed nearly 85 cents to an index near $4.00 and Waha jumped more than 40 cents to an index near $3.05. In the West, SoCal Border traded more than 25 cents higher to an average atop $3.05 while PG&E Gate gained about 15 cents to a similar average.
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