Thursday, December 31, 2015

Natural Gas: Storage Withdrawls Broadly In Line With Estimates, Futures Hold Earlier Gains

New front futures (Feb.) are trading up 12.6 cents at 2.340 but we really don't care.*
First up,, who I believe are referring to the Platts estimates:
Natural gas futures held on to sharp gains on Thursday, the last trading day of the year, after data showed U.S. natural gas supplies in storage fell more than expected last week.

Natural gas for delivery in February on the New York Mercantile Exchange rallied 11.1 cents, or 5.04%, to trade at $2.325 per million British thermal units during U.S. morning hours. Prices were at around $2.333 prior to the release of the supply data.

Trading volumes are expected to remain light, reducing liquidity in the market which could result in exaggerated moves.

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended December 25 fell by 58 billion cubic feet, broadly in line with expectations for a decline of 57 billion.

That compared with a drawdown of 32 billion cubic feet in the prior week, 26 billion cubic feet in the same week last year, while the five-year average change for the week is a drawdown of 98 billion cubic feet.

Total U.S. natural gas storage stood at 3.756 trillion cubic feet, 14.2% higher than levels at this time a year ago and 12.0% above the five-year average for this time of year....MORE
And from Bloomberg, who do their own survey: 

Gas Extends Record Year-End Rally as New Yorkers Brace for Cold
New Yorkers who basked in Florida-like weather this month are going to have to dig out winter gear next week. That prospect is stoking a record year-end rally in U.S. natural gas.

Gas futures have surged 28 percent since mid-December, the biggest rebound for the period in New York Mercantile Exchange data going back to 1990. Prices had fallen to a 16-year low earlier this month because of unusually warm weather in the Midwest and Northeast, the biggest consumers of the heating fuel, and record stockpiles. Forecasts have since turned frigid, with Manhattan’s low temperature on Jan. 4 sliding to 21 degrees Fahrenheit (minus 6 Celsius), 6 below normal, said AccuWeather Inc.

“These are wild days,” said John Kilduff, partner at Again Capital LLC in New York. “We got prices so low like it was going to be Florida in the Northeast for the entire winter, and obviously that’s not going to be the case. Once that hit, prices rebounded.”

Futures Price
Gas for February delivery climbed 11.6 cents, or 5.2 percent, to $2.33 per million British thermal units at 9:50 a.m. on the Nymex. Prices have jumped 15 percent this week and are up 4.3 percent in December, heading for the first monthly gain since June. The market will be closed Friday in observance of New Year’s Day.

Overnight weather models now show up to two to three colder-leaning weeks “due to a slight hiatus in warm El Nino,” Matt Rogers, president of Commodity Weather Group LLC in Bethesda, Maryland, said in an e-mail. There will be a stronger cold push on the East Coast early next week than previously anticipated.

This blast of cold weather in the East may boost gas withdrawals from storage caverns into the triple digits as early as next week, especially because draws have been a bit stronger than mild weather would have suggested this month, Kilduff said.

A U.S. Energy Information Administration report scheduled for release at 10:30 a.m. in Washington will probably show that inventories fell by 56 billion cubic feet last week, based on the median of 18 analyst estimates compiled by Bloomberg. Estimates were for declines ranging from 18 billion to 78 billion. The five-year average drop for the period is 95 billion, while last year’s was 29 billion....MORE
Here's the EIA's storage report showing total drawdown at 58 Bcf. 
*On Tuesday we posted:
Farewell Natural Gas, It's Been Fun
I think it's time to bid adieu to natty for a while. $2.358 up another 10.2 cents.
Here's the recent action via FinViz:

January    $2.346 up 11.8 cents
February  $2.358 up 10.2 cents
We'll be back after the storage report on Thursday....
So we missed the drop yesterday and the recovery today. More next week.