Natural Gas Pulls Back On Lower-Than-Expected Inventory Draw

Vladimir Zernov

Mild weather leads to light demand for natural gas, and market sentiment remains bearish.

Natural Gas

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Key Insights

  • Working gas in storage declined by 75 Bcf from the previous week, missing analyst estimates. 
  • Warm weather continues to put pressure on demand for natural gas. 
  • Natural gas prices remain stuck below the $2.00 level. 

On February 8, 2024, EIA released its Weekly Natural Gas Storage Report. The report indicated that working gas in storage declined by 75 Bcf from the previous week, compared to analyst consensus of -76 Bcf.

The five-year average for this time of the year is a draw of -193 Bcf. However, the weather was much warmer than normal, which led to a smaller inventory draw.

At current levels, stocks are 187 Bcf higher than last year and 248 Bcf above the five-year average for this time of the year.

Weather forecasts remain uninspiring, and traders stay focused on weak demand. It remains to be seen whether natural gas bulls will find positive catalysts in the near term.

Natural gas pulled back after the release of the report, which highlighted the weakness of demand. The price for the front-month contract remains stuck below the $2.00 level.

Taking a look at the futures curve, traders do not expect material improvements in supply/demand balance in the upcoming months.

Output remains at high levels, which is bearish for natural gas prices. LNG export plant outages serve as an additional bearish catalyst for natural gas markets.

From a big picture point of view, the trend stays bearish. Natural gas needs significant catalysts to break the current trend.

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About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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