By Anthony Harrup
Natural-gas inventories are expected to have declined last week, although at a slower rate compared to the average for this time of year. The mild temperatures across the U.S. were the main factor in suppressing heating demand.
According to a survey conducted by The Wall Street Journal, withdrawals from underground storage facilities are estimated to have reached 50 billion cubic feet in the week ended December 8. This would result in storage levels dropping from 3,719 Bcf to 3,669 Bcf.
A group of nine analysts, brokers, and traders participated in the survey, with their estimates for the decline ranging from 44 Bcf to 62 Bcf.
The Energy Information Administration is scheduled to release its weekly storage report on Thursday at 10:30 a.m. EST.
The previous week saw natural-gas inventories decrease by a larger-than-expected 117 Bcf due to a cold snap that swept through much of the country, driving up demand. However, forecasts for milder weather throughout December have since diminished demand and caused prices to reach six-month lows.
As of Wednesday, January delivery natural gas was trading 1.2% higher at $2.339 per million British thermal units.
In its monthly short-term energy outlook, the EIA revised its price estimate for spot natural-gas prices at Henry Hub for the winter period. This revision reduced the estimate by more than 60 cents to approximately $2.80 per million British thermal units. The EIA cited high U.S. natural-gas production and mild temperatures limiting demand for heating in the residential and commercial sectors as the reasons for the revision.
“We forecast U.S. natural-gas consumption in the residential and commercial sectors to average almost 40 billion cubic feet a day for the rest of the winter heating season, 2% less than the five-year average,” stated the EIA.