NEW YORK--Natural-gas futures prices climbed sharply early Thursday on forecasts calling for colder end-year temperatures in major markets.
But the market's near-term course will be set by U.S. gas-inventory data due out at 10:30 a.m. EST, which is expected to show stocks dropped last week by only about half of the typical five-year average decline at this time of year.
Expectations of the modest decline in inventory pushed gas futures down by a sharp 2.9% Wednesday and the changing weather forecast inspired buyers to restore most of those losses.
Near-term prices are expected to remain volatile, pulled by the sometimes-conflicting indicators of weather and inventories.
Natural-gas futures for January delivery on the New York Mercantile Exchange were 6.4 cents, or 1.9%, higher, at $3.384 per million British thermal units.
Analysts surveyed by Dow Jones Newswires expect the Energy Information Administration's storage data to show stocks dropped 75 billion cubic feet last week, compared with a drop of 129 bcf in the same week a year earlier and a five-year average decline of 144 bcf.
The smaller-than-normal drop is the result of above-normal temperatures in the Midwest and the Northeast, the major markets for gas and home-heating fuel. A week earlier, inventories posted a modest surprise increase due to lower demand from mild weather.
Latest weather forecasts now show temperatures turning colder than previously forecast in those regions in the final days of the year and into early January.
If the storage estimate is correct, inventories as of Dec. 14 will total 3.731 trillion cubic feet, 2.8% above the year-ago level and 10.4% above the five-year average for the same week.
Jim Ritterbusch, president of Ritterbusch & Associates advisory firm, said he expects prices to hold within the last week's trading range of $3.25-$3.45/mmBtu, guided by weather and supply factors.
"Short of a dramatic miss" in inventory change compared with expectations, "we are having difficulty envisioning a figure that would push values out of the past week's range," he said.
Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $3.35/mmBtu, according to IntercontinentalExchange, compared with Wednesday's average of $3.3025/mmBtu. Natural gas for next-day delivery at Transcontinental Zone 6 in New York traded at $3.62/mmBtu, compared with $3.495/mmBtu.
| Working Gas in Underground Storage, Lower 48 | other formats: Summary TXT CSV |
| Region | Stocks in billion cubic feet (Bcf) | Historical Comparisons |
| 12/14/12 | 12/07/12 | Change | Year Ago (12/14/11) | 5-Year (2007-2011) Average |
| Stocks (Bcf) | % Change | Stocks (Bcf) | % Change |
| East | | | | | | | |
| West | | | | | | | |
| Producing | | | | | | | |
| Total | | | | | | | |
|
Summary
Working gas in storage was 3,724 Bcf as of Friday, December 14, 2012, according to EIA estimates. This represents a net decline of 82 Bcf from the previous week. Stocks were 66 Bcf higher than last year at this time and 345 Bcf above the 5-year average of 3,379 Bcf. In the East Region, stocks were 80 Bcf above the 5-year average following net withdrawals of 49 Bcf. Stocks in the Producing Region were 183 Bcf above the 5-year average of 1,078 Bcf after a net withdrawal of 24 Bcf. Stocks in the West Region were 81 Bcf above the 5-year average after a net drawdown of 9 Bcf. At 3,724 Bcf, total working gas is above the 5-year historical range. Working gas stocks in the Producing Region, for the week ending December 14, 2012, totaled 1,261 Bcf, with 312 Bcf in salt cavern facilities and 949 Bcf in nonsalt cavern facilities. Working gas stocks decreased 8 Bcf in the salt cavern facilities and decreased 17 in the nonsalt cavern facilities since December 7. An historical series of the salt and nonsalt subtotals of the Producing Region is available for download at: wngsr_producing_region_salt.xls. |
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| | Note: The shaded area indicates the range between the historical minimum and maximum values for the weekly series from 2007 through 2011.
Source: Form EIA-912, "Weekly Underground Natural Gas Storage Report." The dashed vertical lines indicate current and year-ago weekly periods. |
