NatGas Inventories Fall Into Deficit, But Record Output & Mild Temps Keep Lid On Prices

December 06, 2012

We examine the latest developments in the natural gas market.


Natural gas fell after the Energy Information Administration reported that operators withdrew 73 billion cubic feet from storage last week, above the 64 to 68 bcf withdrawal that most analysts were expecting.

The build was bullish when compared with last year’s withdrawal of 20 bcf and the five-year average withdrawal of 39 bcf.

In turn, inventories now stand at 3804 bcf, which is 27 bcf below the year-ago level and 150 bcf above the five-year average (calculated using a slightly different methodology than the EIA). This is the first time inventories have been lower than the year-ago level since November 2011.

The weather last week was close to seasonal norms, but much cooler than a year ago. Still, the NOAA’s 6- to 10-day forecast continues to call for warmer-than-normal temperatures across the population-dense U.S. East Coast and Midwest. That will dampen demand for gas.

Indeed, next week’s report may show a much-smaller-than-normal withdrawal from inventories due to current mild temperatures.


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