Natural Gas Flat During Quiet Thanksgiving Trading Session

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Natural gas futures are trading relatively flat on a quiet holiday Thanksgiving trading session. The energy commodity had recorded modest gains in the aftermath of the US government reporting a supply withdrawal in domestic inventories. Market analysts have been anticipating volatile natural gas prices, and so far, they have been accurate.

January natural gas futures dipped $0.009, or 0.18%, to $5.105 per million British thermal units (btu). Natural gas is poised for a weekly gain of 2%, adding to its year-to-date rally of 101%.

According to the US Energy Information Administration (EIA), domestic stockpiles of natural gas declined 21 billion cubic feet in the week ending November 19. This matched the median estimate and it is a complete reversal of the build of 26 billion cubic feet.

In total, US supplies stand at 3.623 trillion cubic feet, down 320 billion cubic feet from the same time a year ago. They are also 58 billion cubic feet below the five-year average of 3.681 trillion cubic feet.

Natural gas prices found support on strong export demand and the expiring December contract.

For most of 2021, natural gas futures picked up notable gains ahead of the options expiry. This is because investors position their books for the month ahead.

Meanwhile, according to Bespoke Weather Services, energy markets could record some short-term gains on US heating demand amid falling temperatures. But this could be short-lived because the latest weather models suggest warmer temperatures heading into the first half of December.

At the same, investors are bullish on immense acquisitions of US liquefied natural gas (LNG) exports from Asia and Europe. Ahead of the winter season, both regions are purchasing vast volumes of natural gas. Since there is a delay in shipping natural gas from Russia through the Nord Stream 2 pipeline, more markets are turning to the US.

“Current forecasts for a La Nina imply colder-than-normal weather conditions in Europe and Asia,” said BMO Capital Markets analyst Randy Ollenberger in a research note. “Colder weather combined with delays to the start of the Nord Stream 2 pipeline could lead to materially higher natural gas prices over the next several months.”

Market analysts are bracing for next week’s report since it will account for cold weather and greater Thanksgiving-related heating demand.

In other energy commodities, January West Texas Intermediate (WTI) crude oil futures rose $0.31, or 0.4%, to $78.08 a barrel. February Brent crude futures edged up $0.06, or 0.07%, to $80.98 per barrel. January gasoline futures slipped $0.0103, or 0.45%, to $2.2556 per gallon. January heating oil futures picked up $0.0087, or 0.37%, to $2.3881 a gallon.

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