Natural Gas Spikes As Winter Weather Sparks Season’s First Supply Withdrawal

Natural gas futures soared before the Thanksgiving holiday, buoyed by a significant drawdown in domestic inventories. Natural gas prices have stabilized in the last couple of months, but they are still adding to their gains on the year. Is $8 the next stop before the month’s end?

January natural gas futures surged $0.304, or 4.1%, to $7.71 per million British thermal units (Btu) at 19:01 GMT on Thursday on the New York Mercantile Exchange. Natural gas prices are poised for a weekly gain of around 16%, adding to its year-to-date rally of 115%.

According to the US Energy Information Administration (EIA), natural gas supplies plummeted by 80 billion cubic feet for the week ending November 18, slightly below the market estimate of 87 billion cubic feet.

In total, US inventories stand at 3.564 trillion cubic feet, 62 billion cubic feet below the same time a year ago. But they are within the five-year historical average.

This was the season’s first withdrawal and it could be the start of more declines in domestic stocks as winter weather starts pummeling the United States.

Last week, Buffalo was hammered with as much as six feet of snow in a 48-hour span. In addition, it was colder than usual in most of the country.

Looking ahead to next week, market experts are anticipating withdrawals ranging from 14 billion cubic feet to 65 cubic feet.

In other energy commodities, January West Texas Intermediate (WTI) crude oil futures plunged $3.11, or 3.84%, to $77.84 per barrel. February Brent futures slipped $0.12, or 0.14%, to $85.02 a barrel. January gasoline futures slumped $0.1458, or 5.74%, to $2.3947 per gallon. January heating oil futures shed $0.0871, or 2.59%, to $3.2793 a gallon.

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