Natural gas futures posted a nominal gain Thursday following the release of government storage figures showing a greater withdrawal than the market was expecting. The Energy Information Administration (EIA) reported natural gas inventories fell by 20 Bcf for the week ended Dec. 2, much greater than estimates centered closer to 9 Bcf. At the close January had added 3.6 cents to $3.457, and February had risen by 2.8 cents to $3.486. January crude oil tumbled $2.15 to $98.34/bbl as oil markets elected to follow slumping equity markets. The Dow Jones Industrial Average fell 199 points to 11,998.

Traders saw the report as supportive. “The 20 Bcf withdrawal was supportive relative to consensus expectations for a smaller 11-12 Bcf decline, although close to our own estimate [22 Bcf] and therefore about where we thought it would be based on the temperatures for the week,” said Tim Evans, analyst with Citi Futures Perspective in New York. “The draw was also still bearish compared with the 66 Bcf five-year average. The report could be seen as something of a moral victory, but the larger problem of an expanding storage surplus remains.”

Looming over the day’s report, however, was a feeling of great unease, as this represented the fourth consecutive week where top analysts in the business had failed to correctly assess the weekly withdrawal figure.

Prior to the release of the figures analyst estimates were for a substantially smaller withdrawal. Last year at this time 79 Bcf was withdrawn. For the week ended Dec. 2, a Reuters poll of 26 analysts showed an average 12 Bcf reduction with a range from a 42 Bcf draw to a 3 Bcf build. IAF Advisors in Houston expected a pull of 3 Bcf, and industry consultant Bentek Energy forecast a 1 Bcf draw.

Bentek missed the mark by a stout 19 Bcf, but going into the report correctly determined that “most of the risk [was] to the downside this week. A stronger-than-forecast draw in the East is highly likely as the largest storage facilities in the region reported large draws for the week. Dominion [Transmission] was the only exception, which had no change week-on-week. The Thanksgiving holiday provided some support for a small draw or even a national injection as demand declines during the four-day holiday added uncertainty for this week’s forecast.”

Bentek’s experience with the East Region is illustrative. Bentek had forecast a 10 Bcf withdrawal for the East Region storage, bringing regional working gas inventories down to 2,064 Bcf, but the actual figure was a 16 Bcf pull. This came as a surprise to analysts as usually Bentek is “spot on” with its assessment of East Region inventories, according to one observer. Bentek had noted in a report that the “ANR, NGPL, NNG, Columbia Gas-TCO and Texas Gas system reported strong draws during the week ended Nov. 25. Many other systems remain on injection mode, including no change in inventory at the DTI [Dominion] system. Mild weather in the region has kept withdrawals small compared to historical levels, despite reaching near capacity.”

Forecasters in the six- to 10-day period are calling for above-normal temperatures in the eastern U.S. Commodity Weather Group in its six-to 10-day outlook shows above to much-above-normal temperatures east of a line from Texas to Montana. “Though showing some variability and disagreement in the models (the seemingly eternally cold GFS ensembles) the warmer solutions proposed by the European [Model] during the six- to 10-day are still favored today, especially across the South,” said Matt Rogers, president of the firm. “A late-period cool push into the Midcontinent in the six-10 is a common theme in the models, and lasts into the early 11-15, but this is a continued theme of variability, rather than a ‘locked in’ pattern. With lowering heights in the Gulf of Alaska during the 11-15 day, this theme of warm-dominated variability should continue into the second half of the month.”

If that trend of warmth continues to translate into fewer-than-normal accumulations of heating degree days (HDD) in major U.S. metropolitan areas, then the outlook for next week’s storage report could reflect equally low heating requirements. This week’s modest draw report could be repeated next week. The National Weather Service (NWS) for the week ended Dec. 3 showed that New England tallied 143 HDD, or a whopping 62 fewer than normal, and the states of New York, New Jersey and Pennsylvania recorded 137 HDD, or 53 fewer than normal. The Midwest from Ohio to Wisconsin accumulated 192 HDD, or 25 fewer than normal.

NWS expectations are that below-normal accumulations of HDDs will continue. For the week ending Dec. 10, NWS is predicting that New England will see 168 HDD, or 55 fewer than normal, and the lower Northeast will endure 161 HDD, or 46 fewer than its seasonal norm. The Midwest is expected to shiver under 229 HDD, or seven fewer than normal. By mid-December, heating load typically kicks in. The five-year average for the week ending Dec. 9 is a 142 Bcf draw and last year 154 Bcf was withdrawn.

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