NYMEX February natural gas futures settled 11.5 cents higher at $2.382/MMBtu Thursday following the report of a larger-than-expected storage withdrawal.
US natural gas in storage dropped 113 Bcf to 3.643 Tcf for the week ended January 1, the Energy Information Administration said Thursday, above consensus expectations of a withdrawal between 93 Bcf and 97 Bcf. A 4-Bcf reclassification of base gas to working gas made the implied flow from storage for the week 117 Bcf.
The withdrawal was right around the 116-Bcf withdrawal reported at this time in 2015 yet below the 140-Bcf five-year average withdrawal, according to EIA data.
"The overall message is that the baseline supply/demand balance has tightened at least somewhat, with either some moderation in supply or greater sensitivity to winter cold than had been anticipated," Tim Evans, energy futures specialist with Citi Futures, said in a note.
Evans added the pull could carry over into stronger expectations for reports to follow.
WSI's updated 11- to 15-day forecast showed below-average temperatures across portions of the eastern and southern US. Above-average temperatures were expected across the Northwest and north-central US, as well as much of Canada. The forecast was a bit colder than the previous day's, WSI said.
The level of natural gas demand that the storage numbers indicate is encouraging for bullish traders, said Aaron Calder, an analyst with Gelber & Associates.
"Producers reported roughly 14 Bcf of freeze-offs last week. Typically we discount freeze-offs as a one-time surprise from the first cold of the year but more could be on the way due to the low-price environment," Calder said in a note.
"It may not be worth it to freeze-proof wells that are barely breaking even as it is," he added.
The February contract traded between $2.271 and $2.429/MMBtu during the session.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EST (2400 GMT).
