After ending the prior session down 3.9 cents at $2.598/MMBtu, NYMEX January 2018 natural gas futures ticked higher overnight ahead of the Friday, Dec. 22, open, as traders considered the impact of recent and impending cold weather on storage levels. At 6:44 a.m. ET, the contract was 1.7 cents higher at $2.615/MMBtu.
Natural gas inventories notched their first triple-digit withdrawal of 182 Bcf during the week ended Dec. 15, attributed to elevated weather-related demand.
Colder weather across the contiguous U.S. bolstered demand for natural gas during the storage report week, with substantial gains in consumption in the power and residential/commercial sectors seen driving withdrawals in every region, the U.S. Energy Information Administration said in its latest "Natural Gas Weekly Update."
The reported storage drawdown was an upside miss against the full range of estimates coming into the day. While it trailed the 200-Bcf prior-year draw, it bested the 125-Bcf five-year average pull and widened the year-on-five-year-average deficit following a decline for three consecutive weeks. Total working gas stocks currently sit at 3,444 Bcf, or 183 Bcf below the year-ago level and 84 Bcf below the five-year average of 3,528 Bcf.
Although returning warm weather that trimmed demand in the subsequent days could allow for a brief reprise of modest storage draws in the next inventory data that will cover the current week to Dec. 22, colder weather in store in the midrange suggests a return of large withdrawals from stocks.
The EIA reported that total U.S. gas consumption notched an 8% decline during the week to Dec. 20, driven in part by a 10% drop in residential/commercial-sector demand over the same period as warmer-than normal weather was observed for much of the country and temperatures near normal were recorded for most of the Eastern Seaboard.
Farther out, however, National Weather Service forecasts for both the six- to 10-day and eight- to 14-day periods show below-average temperatures spanning nearly the entire eastern two-thirds of the country, the Northwest and edges of the Southwest to ultimately encompass the bulk of the country, which should boost anew natural gas demand for heating in the coming weeks.
In cash trade, moderating weather that looked to sap heating demand encouraged the downside to prevail in price activity for natural gas booked for Friday flow.
Among the key hubs, Transco Zone 6 NY day-ahead gas prices led the charge lower with a 98-cent decline on average to an index at $2.465/MMBtu. Chicago next-day gas pricing followed with a better-than-9-cent reduction in deals averaging at $2.538/MMBtu, then benchmark Henry Hub spot gas price activity that faltered by about 8 cents to an index at $2.635/MMBtu and PG&E Gate hub action that shed near 4 cents to average at $2.851/MMBtu.
Regionally, Northeast cash gas pricing tumbled by almost 35 cents to an index at $3.562/MMBtu, as Midwest spot gas prices slumped by approximately 6 cents on average to an index at $2.470/MMBtu. Gulf Coast next-day gas price action logged a roughly 10-cent decrease in trades averaging at $2.502/MMBtu, as West Coast day-ahead gas price activity deflated by 2 cents to average at $2.651/MMBtu.
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