The EIA announced a 209 Bcf withdrawal for the week ended Dec. 16, the largest withdrawal since January. The draw was in the high end of market expectations. The full range of forecasts ahead of the release was -179 to -216. The 209 Bcf draw compares to a 33 Bcf draw reported last year.
The storage report is bullish as prices went up following the EIA report. Prompt month (Jan17) is currently trading up 5-6 cents to 3.60/MMBtu, at time of writing.
Working gas storage inventories dropped to 3.597 Tcf, taking stocks below 2015 and the 5-year max for the second week in a row. Inventories remain above the 5-year average by 78 Bcf or 2%.
Cold temperatures have led to strong storage withdrawals over the past few weeks, and price volatility continues as the market reacts to weather forecast changes and updates.
- Supply: December dry gas is down 1 Bcf/d compared to November due to freeze-offs, however Canadian imports increased about 1 Bcf/d in order to help meet demand.
- Demand: The colder-than-normal temperatures have driven residential and commercial demand to similar levels seen at the beginning of the polar vortex in December of 2013.
Looking ahead, inventories are now below record highs and withdrawals will continue. It is expected that prices will continue to rise as a result of lower inventories and winter weather.
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