Some Life in Natural Gas Prices as Winter Arrives
12/10/2009NEW YORK (Dow Jones)--Natural gas futures wavered Thursday as traders awaited government data expected to show the first withdrawal of the winter heating season from U.S. gas inventories.
Natural gas for January delivery on the New York Mercantile Exchange was trading less than a penny higher at $4.905 a million British thermal units after opening floor trade 4.8 cents higher at $4.946/MMBtu.
The U.S. Energy Information Administration is expected to report that 47 billion cubic feet of gas were withdrawn from storage during the week ended Dec. 4, according to the average prediction of 15 analysts and traders in a Dow Jones Newswires survey. Traders have been eyeing weekly storage reports for signs winter weather is finally putting a dent in brimming inventories as gas is used to heat homes and businesses.
The "weather [was] still warmer than normal last week ... but cold enough to finally result in a draw," analysts with Tudor Pickering Holt in Houston wrote in a note to clients Thursday.
The storage estimate falls short of last year's 66-bcf pull from storage and is well below the five-year-average draw, which was 90 bcf. If the estimate is correct, inventories as of Dec. 4 will total 3.79 trillion cubic feet, about 16% above the five-year average and about 15% above last year's level.
Brisk temperatures in the major population centers of the eastern U.S. were also providing support for gas prices Thursday.
Commodity Weather Group, a Bethesda, Md., private forecaster, was predicting below-normal temperatures across most of the eastern half of the U.S. from Dec. 15 to Dec. 24. The National Weather Service was predicting below-normal temperatures in the Northeast, Great Lakes region and parts of the Southeast from Dec. 15 to Dec. 19. NWS forecasts also pointed to colder-than-normal temperatures in those regions and in the South Central U.S. from Dec. 17 to Dec. 23.
But ample gas inventories continue to place downward pressure on prices. Total gas in storage as of Nov. 27 was a record 3.837 trillion cubic feet, about 15% above the five-year average and 14% above last year's level.
"Now traders are saying to themselves, "We've had two disappointing EIA storage reports in a row, and maybe we got a little ahead of ourselves because any cold weather is going to take time to eat into stocks,'" said Peter Beutel, the president of Cameron Hanover, a New Canaan, Conn., energy advisory firm.
(Wall Street Journal)
