US natural gas inventories decreased by 122 Bcf for the week ending December 11, compared with the five-year (2015–19) average net withdrawal of 105 Bcf. Working gas stocks total 3,726 Bcf, which is 243 Bcf higherthan the five-year average and 284 Bcf higher than last year at this time. Analysts’ expectations had been for a withdrawal of 119 Bcf. Despite being a slightly larger withdrawal than forecasted, NYMEX natural gas futures reacted bearishly to the report.
The Jan21 contract had been trading flat on the day at $2.70 prior to the release of the report but soon fell to a daily low of $2.60. The contract recovered a few cents on the day; clearly, traders were not all that impressed with the data. Traders also seem to be shrugging off the impacts of the recent Nor’easter this week that has brought record amounts of snow and some very cold conditions to parts of the Mid-Atlantic and Northeast. Daily physical cash markets have surged this week along the East Coast with prices in the Boston area eclipsing $10/DTH.
Prices for Cal21 have crept back above Cal22 levels and now trade at about a 9 cent premium (after trading at a 2 cent discount back on December 7). However, a lot can change between now and the Jan21 NYMEX contract expiration date (December 29), especially with a long holiday weekend in the mix. End users with open 2021 positions should view the recent price action as an early holiday gift and add hedge coverage.
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