Natural gas futures worked higher Thursday morning after the Energy Information Administration (EIA) reported a storage withdrawal for the week ending Dec. 18 that was somewhat more than what traders had been expecting.
Utilizing its five-region format, the EIA reported a 32 Bcf withdrawal in its 10:30 a.m. EST release. The pull on storage put inventories at 3,814 Bcf and January futures rose to a high of $2.040, but by 10:45 a.m. January was trading at $2.011, up 2.8 cents from Wednesday's settlement.
Prior to the release of the data, analysts' estimates were in the 25 Bcf withdrawal area. Tradition Energy was looking for a pull of 30 Bcf, and a Reuters poll of 22 traders and analysts showed a range from -13 Bcf to -38 Bcf, with an average -20 Bcf. IAF Advisors calculated a 21 Bcf withdrawal.
Little change was noted in burdensome inventory levels.
"The 32 Bcf net withdrawal from US natural gas storage was more than expectations and so supportive for prices, even though this was still a very small pull from storage for this time of year, far below the 121 Bcf five-year average level," said Tim Evans of Citi Futures Perspective. "We don't know what's behind the miss, but it's possible that either natural gas has picked up some power sector demand via coal-to-gas switching at the lower price levels or that some supply was shut in. In any case, the draw for last week confirms a modestly tighter balance compared with recent flows."
Inventories now stand at 3,814 Bcf and are 561 Bcf greater than last year and 471 Bcf more than the five-year average. In the East Region no Bcf were pulled, and the Midwest Region saw inventories fall by 15 Bcf. Stocks in the Mountain Region fell by 5 Bcf and the Pacific region was down 15 Bcf. The South Central Region, similar to the former Producing Region, added 3 Bcf.
Salt cavern storage was up 2 Bcf at 378 Bcf, while the non-salt cavern figure rose 1 Bcf to 947 Bcf.