With seemingly no end in sight for milder winter temperatures in the forecast, natural gas futures, coming off a 27.3-cent rout in the previous session, traded close to even early Friday. The January Nymex contract was off 0.7 cents to $2.500/MMBtu at around 8:50 a.m. ET.
Updated forecast guidance appeared to offer little encouragement for already wounded bulls, as Bespoke Weather Services made warmer changes to its latest 15-day gas-weighted degree day (GWDD) projections.
“We are moving further and further away from even the five-year and 10-year normal now, with the 15-day forecast today falling more than 20 GWDD warmer than the five-year normal,” Bespoke said. “Risk is increasing for December to ultimately wind up rivaling the warmth of the last two decembers, on a total GWDD basis…As of right now, we simply do not see a meaningful shift in tropical forcing to derail the overall warmer state, with even the mid-month colder risks now having gone by the wayside.”
Meanwhile, the Energy Information Administration (EIA) on Thursday reported a 1 Bcf withdrawal for the week ending Nov. 27, coming in more than 10 Bcf below consensus for the reporting period that included the Thanksgiving holiday.
Last week, the EIA reported a withdrawal of 18 Bcf for the week ended Nov. 20, while 22 Bcf was pulled last year and the five-year average stands at a 41 Bcf draw. Total working gas in storage as of Nov. 27 stood at 3,939 Bcf, which is 343 Bcf higher than year-ago levels and 290 Bcf above the five-year average, EIA said.
“Compared to degree days and normal seasonality (including roughly 14 Bcf of holiday impact over Thanksgiving week), this week’s withdrawal appears loose versus the prior five-year average by approximately 0.5 Bcf/d,” Genscape Inc. analyst Eric Fell said. “Actual weather for the reference week was well below normal for the third week in a row, which again drove a much smaller withdrawal versus the five year average.”
Given milder weather to start the heating season and rebounding production, the likelihood of any storage deliverability issues has “fallen sharply” over the past month, according to Fell.
“With winter risk premium close to zero at this point (some degree of backwardation is likely to be needed to incentivize first quarter withdrawals assuming anything resembling normal weather), the market may now be shifting more attention to the summer 2021 injection season,” the analyst said.
January crude oil futures were up 43 cents to $46.07/bbl at around 8:50 a.m. ET, while January RBOB gasoline was trading fractionally higher at $1.2706/gal.
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