Natural Gas Inventories See unusually strong Draw
The EIA announced a 147 Bcf withdrawal for the week ended Dec. 9. The draw was over average market expectations. the full vary of forecasts ahead of the release was -114 to -144. The 147 Bcf draw is the largest over the past 5 years and compares to a 46 Bcf draw reported last year and a five-year average withdrawal of 79 Bcf.
The storage report is bullish as costs went up following the EIA report. Prompt month (Jan17) is presently trading up 2-3 cents to 3.567/MMBtu, at time of writing.
Working gas storage inventories dropped to 3.806 Tcf, taking stocks below 2015 and 5-year max for the primary time since april. Inventories stay above the 5-year average by 186 Bcf or 5-hitter.
Winter weather remains because the leading factor impacting costs over the past weeks. The 10-15-day weather forecasts weakened causing gas costs to lose over 20 cents per MMBtu on monday, however have since gained some of them back.
- Supply: Dry Gas is up this week as production recovered from the lows seen last week due to freeze offs. Despite the cold weather, the Northeast has not seen lower production so no indication of freeze offs within the region. Canadian imports are higher on to meet incremental demand in the East region.
- Demand: december colder-than-normal temperatures has residential and business demand up over 10 Bcf/d higher compared to a year ago, and the trend can continue throughout the rest of the month.
Looking ahead, storage inventories are currently below record highs and withdrawals can continue strong for at least 3 a lot of weeks including a potential ~200 Bcf draw on next week’s storage report. Therefore, worth gains are expected to continue in the close to term. However, the size of the gains can rely on weather projections, particularly deviations from normal beyond the 15-day period.