Gas Draw Above Market Expectation, Prices Rise

Natural gas storage inventories decreased 19 Bcf for the week ending November 29, according to the EIA’s weekly report. This was higher than the market expectation, which was a draw of 14 Bcf. Working gas storage inventories now sit at 3.591 Tcf, which is 591 Bcf above inventories from the same time last year and 9 Bcf below the five-year average. Prior to the storage report release, the January 2020 contract was trading at $2.420/MMBtu, roughly $0.022 higher than yesterday’s close. At the time of writing, after the release of the report, the January 2020 contract was trading at $2.458/MMBtu. Before the holiday last week, prices were trading around $2.50 and above. However, last Friday, prices saw a decline of ~$0.22 from the close on Wednesday, falling to $2.281. This week, gains have been made on weather forecasts turning colder in the 5-to-10-day period. However, even as temperatures are expected to turn colder, the January contract is still trading sub-$2.50 as of yesterday’s close, closing at $2.408. For prices to garner strength going forward, weather forecasts will need to show extended periods of cold, as the market is currently sitting comfortably on storage inventories and increased production. See the chart… continue reading

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Source: CTRM Center

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