Natural Gas Traders Bracing for Triple-Digit Draw

A triple-digit withdrawal will be major news since it’s still only November and the winter heating season is just getting started. Furthermore, it will significantly widen the year-on-year and five-year storage deficits. This could pose problems later in the winter season if the cold blasts continue.
James Hyerczyk
Natural Gas
Natural Gas

Natural gas futures are on the rise early Thursday, well ahead of today’s U.S. Energy Information Administration (EIA) weekly storage report. Today’s report is one day early because of tomorrow’s U.S. Thanksgiving holiday. It’s also scheduled for a different time at 1700 GMT.

At 0810 GMT, January Natural Gas futures are trading $4.765, up $0.239 or +5.31%. The high of the session is $4.875. This is slightly below last week’s spike high at $4.964.

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Daily January Natural Gas

Pre-report estimates are calling for a triple-digit withdrawal for the week-ended November 16. The range guesses are 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. So if you do the math, today’s withdrawal is expected to come in at nearly 4 times the five-year average. That’s very bullish if you’re keeping score at home.

Why is this important?

A triple-digit withdrawal will be major news since it’s still only November and the winter heating season is just getting started. Furthermore, it will significantly widen the year-on-year and five-year storage deficits. This could pose problems later in the winter season if the cold blasts continue.

EIA Storage Report Estimates

A survey from Bloomberg points to a range of 99 Bcf to 120 Bcf, with a median of 108 Bcf. A Reuters survey of traders and analysts predicts 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. Kyle Cooper of IAF Advisors called for a 120 Bcf withdrawal.

Check the fundamental forecasts to see how the weather will impact the market in conjunction with the EIA data.

European Markets Open Higher

European equity markets opened higher on Wednesday, bucking the tone set by Wall Street the previous session. The latest data shows the pan-European Stoxx 600 up around 0.4 percent shortly after the opening bell, with most sectors and major bourses in positive territory.

At 0819 GMT, the U.K.’s FTSE 100 is trading 6956.55, up 9.99 or +0.14%. Germany’s DAX is at 11138.58, up 72.17 or +0.65% and the French CAC is at 4943.62, up 18.73 or +0.38%.

Helping to boost prices this morning is the bounce in crude oil futures overnight. Crude futures are trading higher early in the session, supported by an industry report that showed an unanticipated drop in U.S. commercial crude inventories.

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