Natural gas retains gains after EIA storage data

Natural gas clung to its daily gains on Thursday as an upcoming cold snap on the East Coast offset a slightly larger-than-projected build in US natural gas inventories. Gains, however, were capped as extended forecasts showed mild weather across the southern and central US.

Natural gas for delivery in December traded at $3.809 per million British thermal units at 14:38 GMT, up 0.55% on the day. Prices shifted in a daily range of $3.836-$3.768. The power-station fuel jumped by 1.53% on Wednesday to $3.788, having earlier risen to a two-week high of $3.849 per mBtu. The contract is up 3% so far this week.

The Energy Information Administration reported on Thursday that US natural gas inventories rose by 87 billion cubic feet in the week ended October 24th, sharply exceeding the five-year average increase of 59 bcf and the 45-bcf gain during the comparable period a year ago. Analysts had projected an 85-bcf jump.

Total gas held in US storage stood at 3.480 trillion cubic feet, narrowing the deficit to the five-year average to 8.2%, compared to 9.1% a week earlier. Inventories were 7.8% below the 3.774 trillion cubic feet of gas held in storage a year ago.

The East region received a net injection of 41 bcf to 1 913 bcf, 6.4% lower than the average, while inventories in the West region rose by 8 bcf to 490 bcf and were 6.5% below the five-year average. The Producing region saw a build of 38 billion cubic feet to 1 077 bcf, which was 11.9% beneath the average.

US weather

According to NatGasWeather.com, natural gas demand over the next seven days will be moderate compared to normal, with a neutral weather trend for the November 6-12 span.

Most of the US will enjoy comfortable readings today before a cold Canadian weather system tracks into the Great Lakes and eastern US tonight. The cold front will push lows into the 30s and 20s throughout the weekend, while also carrying light snowfall. It will also extend into the Southeast, pushing overnight lows into the 30s. The West Coast will see Pacific storms carrying cooler conditions.

Early next week the central and southern US will warm up, NatGasWeather.com reported, with readings again becoming mild. Cool weather systems, however, will track across the Midwest and Northeast mid-week, bringing showers and little-below-normal readings. The West is expected to remain dominated by cooler conditions.

However, despite the colder-than-normal weather across large parts of the US, mild longer-term weather patterns, particularly for the central and southern US, failed to persuade investors to push the market much further after the previous two days’ 4.1% advance.