Natural Gas Prices Retreat Despite Larger-Than-Expected EIA Withdrawal

Natural gas futures are struggling to hold on to earlier gains despite the first weekly U.S. supply decline of the winter heating season. A government report that showed a larger than expected draw failed to bring in the buyers that many had expected, leading those who brought early hoping for a breakout rally to take profits and pare positions ahead of the U.S. Thanksgiving holiday on Thursday. The report was released a day earlier than usual because of Thursday’s Thanksgiving holiday.

At 1813 GMT, January Natural Gas futures are trading $4.575, up $0.054 or +1.30%.

According to the U.S. Energy Information Administration, domestic supplies of natural gas fell by 134 billion cubic feet for the week-ended November 16, signaling the first weekly drawdown of the winter heating season.

Pre-report estimates called for a triple-digit withdrawal for the week-ended November 16. The range guesses were minus 92 Bcf to minus 121 Bcf. Last year, the EIA reported a 42 Bcf withdrawal for the same period. The five-year average for this time of year is a withdrawal of 25 Bcf.

A survey from Bloomberg pointed to a range of 99 Bcf to 120 Bcf, with a median of 108 Bcf. A Reuters survey of traders and analysts predicted a range of 92 Bcf to 121 Bcf, with a median of 109 Bcf. The Intercontinental Exchange (ICE) EIA financial weekly index futures contract settled Monday at a withdrawal of 114 Bcf.

The EIA report showed that total stocks now stand at 3.113 trillion cubic feet, down 620 billion cubic feet from a year ago, and 710 billion below the five-year average.

Crude Oil

U.S. West Texas Intermediate and international benchmark Brent crude oil are trading nearly 4 percent higher late Wednesday, rebounding from a six-month low hit yesterday, despite a larger-than-expected crude oil build. Traders said strong demand for refined fuel offset concerns over rising U.S. inventories.

At 1823 GMT, January WTI crude oil is trading $55.30, up $1.87 or +3.48% and January Brent crude oil is at $64.18, up $1.65 or +2.64%.

According to the U.S. Energy Information Administration (EIA), U.S. crude stocks rose 4.9 million barrels the week-ending November 16. This was larger than the 2.5 million barrel forecast. Crude inventories have risen for nine straight weeks, the longest streak of increases since March 2017.

The EIA also said crude stocks at the Cushing, Oklahoma futures delivery hub for WTI fell 116,000 barrels, the first drop in nine weeks.

Gasoline stocks fell 1.3 million barrels to the lowest level since December 2017, while distillate stockpiles dropped by 77,000 barrels, the EIA data showed.

The large crude oil build was somewhat bearish, but the drawdown in gasoline and distillates and a large rise in refinery activity could mean the long streak of increases may be nearing an end.