Winter Pushes Gas prices Up

Winter Pushes Gas prices Up

U.S. natural gas storage inventories decreased by 50 Bcf during the week ending November. 25, per EIA.

The 50 Bcf draw was relatively in line with market expectations of a draw in the low 50s and full vary of forecasts expecting a draw between 26 and 65 Bcf. The withdrawal compares to a 35 Bcf reportable last year.

The report is bullish as prices are up 11 cents this morning with about 3 cents of the gains happening once the storage report. Prompt month (Jan2017) is trading at $3.47 per MMBtu, at time of writing.

Storage inventories dropped below the 4 Tcf mark and stand at 3.995 Tcf, level only 0.6% above 2015 that is additionally the prior 5-year high, and 6.3% above the 5-Year average.

There is a bullish sentiment within the market that started about 3 weeks which are more pronounces since last week. The Jan17 contract is up 28th or 75 cents since the lows seen on November 9th.

Winter weather is finally materializing and although there'll be a bearish storage report next week (smaller-than-average draw), the following two weeks can see significant higher draws than historical and can push inventories below last year and 5-year highs.

Drilling info continues to project price gains over the current forward curve with prices reaching levels north of $4.00+/MMBtu during winter months in 2017.