Meanwhile, the number of rigs drilling for natural gas in the U.S. rose by five to 374 last week.
Natural Gas Rig Count
Bottom line: The latest inventory data from the EIA were bullish, as the inventory deficit against the five-year average widened from 280 to 327 bcf.
Prices have had trouble breaking through the mid-$4/mmbtu range in recent weeks, and a period of consolidation may be due. The rapid expansion of the inventory deficit may pause with next week’s report, a reflection of this week’s relatively mild weather.
However, if forecasts for cold January temperatures come to fruition, the deficit will resume its widening, keeping upward pressure on natural gas. Moreover, even if January only sees “normal” weather, downside in prices will be limited by the current 300 bcf+ deficit.