Natural gas inventories decline 147 Bcf for the week ended December 9, 2016

Natural gas prices were down more than 3% today despite a draw in inventories for the week ended December 9, 2016. The EIA reported that stockpiles of natural gas fell 147 Bcf last week, 17 Bcf more than analysts expected, but concerns about warmer weather are keeping prices down.

Natural gas inventories for the week ended December 9, 2016

Last week’s draw was significantly higher than the average draw of 79 Bcf for this time of year. It pushed natural gas inventories 1.3% below last year’s level after natural gas in storage reached an all-time high last month.

The cold weather that has swept across the U.S. could come to an end later this month, reducing demand for natural gas in heating. About half of all homes in the country use natural gas for heat, making winter a major seasonal driver for natural gas prices.

Thursday’s data raised hopes that strong demand could quickly work down stockpiles this winter, helping to alleviate a glut that has weighed on prices. Citi Futures analyst Tim Evans told The Wall Street Journal it was “a clearly bullish report that implies greater sensitivity to cold temperatures than anticipated, a possibly ongoing factor.”

“The bottom line is that the market will continue to see support from close to normal weather and decline in production,” said Kobe Liu, an analyst at Schneider Electric. “We should see natural gas inventory quickly revert to the 5 year average as we move into the core part of winter after notching a record level at the end of injection season.”


Legal Notice