EIA Weekly Natural Gas Inventories Decline 50 Bcf, Prices Continue To Advance

The weekly Energy Information Administration (EIA) natural gas storage data reported a decline of 50 billion Cubic feet (Bcf) for the week ending November 25th following a decline of 2 Bcf the previous week and this was a slightly lower draw that the 52 Bcf expected.

Overall stocks are now only 0.6% higher than the year-ago figure, although they remain 6.3% above the 5-year average. Regional variations remain stark with Pacific inventories 13.0% below year-ago levels with Mountain stocks 21.7% higher.

Gas prices will remain extremely sensitive to changes in weather conditions at this time of the year with any move to colder conditions triggering a sharp increase in demand for gas for heating.

Natural gas prices have maintained a strong tone this week with gains to the highest level in two years on Wednesday. Prices have increased sharply 24% over the past two week and also increased in 8 of the last 9 months.

Natural gas prices have gained support from a sharp rise in crude prices following the OPEC production deal. There has also been backing from the latest weather forecasts, which indicate that below-average temperatures will spread across most of the country over the next week.

Overall, prices increased to 3-week highs around the $3.35 per mBtu level on Wednesday and extended gains to above $3.40 on Thursday ahead of the inventories data.

Prices pushed higher again to fresh two-year highs above $3.47 following the data before drifting lower on profit taking.

Tim is a contributing author to EconomicCalendar.com. He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.