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James Hyerczyk
Natural Gas

Natural gas futures are trading lower on Friday as traders price in calls for milder temperatures throughout the country over the weekend. Volume is also light with an early close due to the Thanksgiving holiday. Lower weekly cash prices are also weighing on the nearby futures contract.

At 16:20 GMT, January natural gas futures are trading $2.866, down $0.061 or -2.08%.

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Short-Term Weather Outlook

According to NatGasWeather for November 27 to December 3, “The western, central and eastern U.S. will be mild through the weekend with highs of 40s to 70s. A stronger cold shot will sweep across the Midwest early next week with lows of 10s to 30s, while a second system tracks across Texas and the South with showers and cooler than normal highs of upper 40s to 60s. Overall, national demand will be low through the weekend, then moderate-high early next week.”

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US Energy Information Administration Weekly Storage Report

The U.S. natural gas storage withdrawal season started one week later than normal with a below-average draw of 18 Bcf for the week-ended November 20 as the Henry Hub winter strip showed slight declines with demand somewhat muted for the week in progress, S&P Global Platts reported.

U.S. natural gas storage inventories decreased to 3.940 Bcf for the week-ended November 20, the U.S. Energy Information Administration said November 25. The report was issued one day earlier than normal this week to accommodate the Thanksgiving holiday in the U.S.

The withdrawal was less than an S&P Global Platts survey of analysts calling for a 25 Bcf pull. Responses to the survey ranged from a 4 Bcf injection to a 39 Bcf withdrawal. The build was also less than the 47 Bcf, according to EIA data.

Daily Forecast

Friday’s price action suggests traders are booking profits after a short counter trend rally. Although temperatures are expected to turn colder early next week, some probably don’t want to take a chance holding positions over the weekend due to the recent trend in temperatures toward the warmer side. Thin trading volume also means the bigger players are on the sidelines, making the market susceptible to volatile price swings.

For a look at all of today’s economic events, check out our economic calendar.

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