On Thursday, January Natural Gas opened up around $0.09 ahead of the weekly natural gas storage report, where a huge withdrawal was expected. Most of the morning was spent in a tight range between $4.33 and $4.35. Just before the report hit the wires, January dove to a low of $4.288. If somebody was trying to out-guess the report, they couldn’t have been more wrong. EIA reported a withdrawal far above the market consensus – see below – shattering the all-time record. January instantly popped back up to the high $4.30’s and then started to move gradually higher. The year-to-date high of $4.44 has been a sticky technical level for this market and Natural Gas spent nearly an hour teetering on either side of it before retreating back to $4.41. But a steady rally during the last hour of the day took January to the highest settle of the past 12 months. This morning in Globex, January Natural Gas is up around a penny, WTI Crude is down around a quarter and Heating Oil and Gasoline are up around a cent and a half.
Yesterday morning the EIA reported the largest weekly natural gas storage withdrawal since the Department of Energy started keeping track in 1994: 285 BCF. Cold weather across nearly the entire country, strong demand from the industrial and power generation sectors, displacement of heating oil by natural gas in the Northeast and the expansion of salt cavern storage that can be rapidly filled and emptied all played a role in setting the new record. The five year average inventory deficit more than doubled in a week, from 110 BCF to 261 BCF while the year-over-year deficit jumped from 273 BCF to 488 BCF.
Contrary to nearly everything else in the natural gas marketplace, Northeast cash prices continued to sink on Thursday. Today was forecast to be the warmest day of the week in addition to being Friday. New England city gates averaged near $8.00 while New York posted just over $4.00.
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Natural Gas Glossary