U.S. natural gas storage inventories decreased by 42 Bcf during the week ending Dec. 2, per EIA. The 42 Bcf draw was larger than market expectations of a draw in the mid 30s. The withdrawal compares to a 69 Bcf reported last year. The report is bullish and prices increased 4-6 cents following the release although the Jan17 contract is currently trading relatively flat from yesterday at $3.608 MMBtu.
Working gas storage inventories dropped to 3.953 Tcf, level 1.3% above 2015 and 6.9% above the 5-year average. Inventories remain at record high levels, however, this is about to change. The artic cold temperatures that are covering most of the U.S. have pushed demand up while supply remains flat to down this week. Three-digit storage withdrawals are expected over the next 3 EIA storage reports compared to average 43 Bcf draws last year. Prices are expected to continue its upward trend over the next weeks as demand outpaces supply.
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