In what was likely the calm before the storm, natural gas prices slid quietly to either side of unchanged Wednesday as traders elected to wait for fresh storage and weather news due out on Thursday. At the closing bell the December contract was 0.7 cents lower at $4.254. Estimated volume was proof of the quiet trading, with only 74,943 contracts changing hands.

Market watchers agreed that the volume and price action in the natural gas pit was light ahead of the double helping of fundamental data expected Thursday. In addition to the weekly storage report that will be released at 10:30 a.m. EST, traders are anxious to see what the National Weather Service says in its updated 30- and 90-day forecasts.

Though much as been written about the potential warming effect of a moderate El Nino weather pattern this winter, those forecasts have yet to bear out. Instead, October temperatures were chilly across much of the country, with Chicago, Cincinnati and New York logging 25 consecutive days without a single day of above-normal temperatures. Then, after a brief warm-up in early November, Old Man Winter returned for what appears to be an extended stay (Check back with https://intelligencepress.com for an update following the release of NWS’ long-lead forecasts.)

While the extended weather outlooks will take center stage Thursday afternoon, storage will be the name of the game in the morning. Expectations call for a withdrawal in the 0-30 Bcf range, which if realized would fall short of last week’s 48 Bcf decline and the five-year average draw of 29 Bcf. Coming on the low end of that range with his estimate for a net zero change in inventory levels, Thomas Driscoll of Lehman Brothers in New York shed some light on the surprising 48 Bcf withdrawal seen last Thursday.

Driscoll attributed the vast difference between expectations of the storage withdrawal (10-30 Bcf) and reality (48 Bcf) on the disparity between the Sunday-to-Sunday time period covered by the National Oceanic and Atmospheric Administration’s heating degree day data and the Friday-to-Friday time period covered by EIA’s weekly storage report.

“When temperatures are materially different from one Friday-Saturday period to the next, [NOAA] will provide a misleading indicator of the likely storage behavior,” he wrote Wednesday in a note to clients.

According to Driscoll, it is a 39-hour difference in the time frames that contributed to the surprise. Heating degree day data used to estimate last week’s storage report, failed to include the very cold weather on Nov. 1-2, and Driscoll believes the heating degree data used to estimate this week’s storage report also failed to include the very warm data from Nov. 8-9. “More seasonal weather the 15th and 16th caused us to overestimate demand for the week ending Friday at 9 a.m. We are revising our estimate for this week from a withdrawal of 25 Bcf to a 0 Bcf withdrawal,” he continued. By comparison, last year the market injected 33 Bcf.

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