The EIA announced a 147 Bcf withdrawal for the week ended Dec. 9. The draw was higher than average market expectations. The full range 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 prices went up following the EIA report. Prompt month (Jan17) is currently 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 first time since April. Inventories remain above the 5-year average by 186 Bcf or 5%.
Winter weather remains as the leading factor impacting prices over the past weeks. The 10-15-day weather forecasts weakened causing gas prices to lose over 20 cents per MMBtu on Monday, but have since gained some of them back.
Looking ahead, storage inventories are now below record highs and withdrawals will continue strong for at least three more weeks including a potential ~200 Bcf draw on next week’s storage report. Therefore, price gains are expected to continue in the near term. However, the size of the gains will depend on weather projections, particularly deviations from normal beyond the 15-day period.
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