NYMEX December natural gas futures settled 10.2 cents higher at $2.364/MMBtu Thursday on the back of a bullish storage report.
The US Energy Information Administration announced a 52-Bcf storage injection for the week ended October 30, below the consensus estimate of a build between 55 Bcf and 59 Bcf. The injection came in below the five-year average increase of 58 Bcf and far below the 90-Bcf build from the same time last year.
The injection suggests "either a tightening trend in the background supply/demand balance, or perhaps some difficulty in matching production flows with available remaining storage capacity," Tim Evans, energy futures specialist with Citi Futures, said in a market note.
Evans said attention is now likely to turn to short-term outlooks, "where even moderately warmer than normal temperatures look quite bearish compared to what was an intense cycle of cold in the second half of November 2014."
WSI's 11-to-15-day forecast showed widespread above-average temperatures across the northern half of the nation and southern Canada. Near-average to slightly below-average temperatures are more likely across the southern tier of the nation into the West, according to WSI. Thursday's forecast was a bit warmer than Wednesday's over the south-central and eastern US, while the West and north-central US were a bit cooler.
WSI said, however, there is an increasing spread between models and uncertainty that begins during the end of the 6-10 day period with a storm system expected to move into the East.
Aaron Calder, an analyst with Gelber & Associates, said weather outlooks offered some price support even before the storage report.
"Yesterday's warm forecasts showed a mass of supercooled air over the Pacific that was unable to break through blocking over the Rockies. Today the consensus is the cold air should be strong enough to break the air and flood the nation with heating demand," he said.
Still, he added the below-expectations injection is not a result of new demand taking away gas that would otherwise be stored, "but rather a result of people not wanting to put additional gas in storage and forcing others to take it."
Bentek Energy, a unit of Platts, forecast total US demand averaging about 73.9 Bcf/d over the next two weeks, well above the 68.8 Bcf/d month-to-date average.
Bentek forecast production would average about 71.2 Bcf/d during that period, steady with the average so far this month.
The contract traded between $2.249 and $2.383/MMBtu.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EST (2400 GMT).
