Natural Gas Report: Massive November Drawdown Opens Upside

December 5, 2013 10:34 AM

  •  Inventories stand at 3,614 Billion cubic feet (Bcf) -- 2.7% below year-ago and 5.2% below the five-year average.
  • This week notes a 162 Bcf net withdraw from storage, a significantly larger draw than was expected.
  • Frigid temperatures limited injections to storage. NGF14dec5


December 13 natural gas opened today at $3.96 1/2 and rocketed higher through September's resistance at $4.12 to end the day viciously higher at $4.15. A violation of $4.15 would clear bulls' path to the late May double-top at $4.30. Key support lies at $3.38 from a month ago and from there, $3.15 from February.

The average temperature in the continental United States during the report week was 36.7°F -- 7.4°F cooler than the same time last year and 5.7 degrees below the 30-year average temp, but temperatures have slid since then. Two weeks ago, we noted, the longer temperatures hold home heat demand at bay, the more storage can build and the lower prices will be near-term.

Prices --

The Henry Hub price rose slightly from $3.79/MMBtu last Wednesday to $3.88/MMbtu yesterday but took off like a cat on fire when the news of the massive net withdraw was released and closed today, Thursday at $4.15.

Consumption --

Consumption actually softened by 10.5% from the previous week, led by a 16.6% decrease in consumption for power generation and a general decrease in the residential/commercial and industrial sectors.

Storage --

Working natural gas in storage plummeted to 3,614 Billion cubic feet. The 162 Bcf net decline in storage levels was the largest net November decline EIA has noted since 1994.

Data provided by EIA.

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