Leading up to today's report, natural gas wholesale contracts declined again on Wednesday, extending Tuesday's plunge of almost 11%, as forecasts of mild weather replaced predictions of severe cold.
Prices dropped by about $0.60 per million BTUs over the past five trading days, primarily as a result of revised weather forecasts calling for unseasonably warmer temperatures over the southern and eastern states beginning next Monday. Until then, colder weather will persist over most of the country. Demand for natural gas is expected to remain high through the weekend, then moderate with the expected warmer temperatures.
Stockpiles have now dropped to 10.9% below their levels of a year ago and 2.3% below the five-year average.
Natural gas for February delivery on the New York Mercantile Exchange shed 6.0 cents, or around 1.83, to $3.267 per million British thermal units. Natural gas wholesale contracts tumbled 39.7 cents, or 10.66%, on Tuesday after updated weather forecasting models pointed to above normal temperatures throughout large portions of the southern and eastern U.S. through January 16, dampening demand for the heating fuel.
About half of U.S. homes use natural gas for heating. Natural-gas markets have been volatile in recent weeks, changing course rapidly in response to shifting outlooks in short-term weather patterns. Natural gas prices rallied to two-year highs at the end of December amid weather forecasts that predicted extreme cold would hit most of the country in January. But the arctic blast is now expected to be briefer than many anticipated, with milder temperatures taking hold in mid-January.
See a recap of previous weeks EIA storage reports here.
EIA Natural Gas Storage Report 01-05-17
Working gas in storage was 3,311 Bcf as of Friday, December 30, 2016, according to EIA estimates. This represents a net decline of 49 Bcf from the previous week. Stocks were 364 Bcf less than last year at this time and 21 Bcf below the five-year average of 3,332 Bcf. At 3,311 Bcf, total working gas is within the five-year historical range.
Analysts expected a draw of approximately -82 bcf. As of 10:32 ET, natural gas futures were trading lower by 2.3% to $3.193.
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Review a recap of previous weeks EIA Natural Gas inventory Reports.
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