Natural gas futures weekly recap, January 26 – January 30

Natural gas slid for a fourth day in five on Friday, falling for a second straight week, after data by the EIA showed a smaller-than-expected inventory withdrawal, with another lean draw projected to come next Thursday. Forecasts for active weather across the US provided some support.

On the New York Mercantile Exchange, natural gas for delivery in March fell 1.03% on Friday to settle the week 9.2% lower at $2.691 per million British thermal units. Prices shifted in a weekly range of $2.966, touched on Tuesday, and Fridays trough of $2.637, the lowest since August 2012.

NatGasWeather.com reported in a Friday mid-day update that cold blasts will sweep across the eastern US and Great Lakes over the coming week with rains and snow, inducing strong heating demand across many high-use states.

Merging weather systems will form a potent and fast moving storm on Sunday into Monday that will impact the Ohio Valley and Mid-Atlantic with snow accumulations of 4-8″. The Great Lakes and Northeast will see overnight lows fall below zero for several days.

Additional cold blasts will affect the same regions later in the week, with some having the potential to push deeper into the Southeast. However, a following warm-up is expected as cold air retreats into Canada around February 8th through February 12th.

“We still expect very cold air to remain anchored over Canada in mid-February, which will continue to provide glancing blows of sub-freezing temperatures to the Midwest and Northeast,” NatGasWeather.com said. “However, the orientation of how the cold air advances into the US would need to change if its going to sweep across enough of the country as would be necessary for much larger than normal withdrawals to result.”

Temperatures

According to AccuWeather.com, readings in New York will bottom at 11 degrees Fahrenheit on February 2nd, 16 below usual, and are expected to remain cooler than normal through February 9th. Chicago will see the mercury plunge to 10-12 degrees on February 1-2nd, compared to the seasonal 19 degrees, before bottoming at 7 degrees two days later. Seasonal temperatures are expected to return on February 8th.

Down South, Houston will range between 37 and 54 degrees tomorrow, compared to the average 46-64, and will be mostly seasonal on February 4th at 49-62 degrees. On the West Coast, temperatures in Los Angeles will peak in the mid 70s through February 6th, compared to the average of 68, before reaching 82 degrees on February 8-9th. Readings are expected to max out in the 70s for most of the month.

Supplies

The Energy Information Administration reported on Thursday that US natural gas inventories declined by 94 billion cubic feet in the seven days through January 23rd, well below analysts’ projections for a withdrawal in the range of 108-113 bcf. Stockpiles fell by 219 bcf during the same week last year, while the five-year average draw was 168 bcf.

Total gas held in US storage hubs amounted to 2.543 trillion cubic feet, narrowing the deficit to the five-year average inventories of 2.622 trillion to 3.0%, or 79 bcf, from 5.5% a week earlier. The surplus to the year-ago stockpiles level of 2.219 trillion cubic feet widened to 14.6% from 8.2% a week earlier.

Moreover, next week’s withdrawal is also expected to be below the average as the widespread warmth this week is factored in, especially with highs over the central and southern US that reached well into the 70s. The five-year average withdrawal for the week ended January 30th is 165 billion cubic feet, while inventories declined by 259 bcf during the comparable period a year earlier.