Leading up to today's EIA Natural Gas Storage report, Natural gas wholesale contracts fell to a fresh seven-week low on Wednesday, as market players looked ahead to fresh weekly information on U.S. gas inventories to gauge the strength of demand for the fuel. Natural gas for delivery in November on the New York Mercantile Exchange touched a daily low of $2.627 per million British thermal units, a level not seen since September 8 before settling at $2.731, down 4.3 cents, or 1.57% on the day. Meanwhile, the more actively-traded December contract sank 11.3 cents, or 3.7%, to $3.036 per million British thermal units.
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November wholesale contracts plunged 17.0 cents, or 5.12%, on Tuesday, as forecasts showing unseasonably warm temperatures across the U.S. Midwest in the days ahead dampened demand expectations for the heating fuel.
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Market participants awaited weekly supply data due this morning, which is expected to show a build of approximately 73 billion cubic feet in the week ended October 21 (see more below). That compares with a gain of 77 billion cubic feet in the preceding week, 62 billion a year earlier and a five-year average build of 76 billion cubic feet. Total natural gas in storage currently stands at 3.836 trillion cubic feet, according to the U.S. Energy Information Administration, 1.2% higher than levels at this time a year ago and 4.8% above the five-year average for this time of year. Natural gas wholesale contracts have been under heavy selling pressure in recent days as warmer-than-average weather in key gas-consuming regions in the U.S. ignited speculation that a mild winter will curtail demand for the heating fuel and leave a glut of it in storage, weighing on prices next year.
See a recap of previous weeks EIA storage reports here.
EIA Natural Gas Storage Report 10-27-16
Working gas in storage was 3,909 Bcf as of Friday, October 21, 2016, according to EIA estimates. This represents a net increase of 73 Bcf from the previous week. Stocks were 52 Bcf higher than last year at this time and 182 Bcf above the five-year average of 3,727 Bcf. At 3,909 Bcf, total working gas is above the five-year historical range.
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Analysts expected the report to show a build of 73 Bcf. As of 10:32 ET, natural gas futures were trading higher by 0.2% to $2.736.
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Recap of previous weeks EIA Natural Gas inventory Reports.
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