Cash natural gas fell 11 cents overall on average Wednesday as the screen continued weak and there was no hint that winter weather would be enough to make a significant dent in storage. Northeast points were particularly hard hit but the Midcontinent and East weakened as well. At the close of trading January futures had fallen3.0 cents to $3.382 and February had dropped 2.9 cents to $3.412. January crude oil added 98 cents to $86.77/bbl.
The forecast of a cold incursion bringing chilly air from North Dakota to North Texas in the next several days was small comfort to Midcontinent producers.
"That helped a little bit [with prices], but there is still a lot of supply. People are coming to me with their gas, so I don't know what is going on," an Oklahoma producer said. "All restrictions on OGT [Oklahoma Gas Transmission] have opened up, but NGPL may have some constraints into Chicago. The market seems pretty oversupplied right now. I think this is a good place to put on some short hedges for a producer." Thursday's Energy Information Administration (EIA) expected report of a thin withdrawal "may have spooked the market and that is why Nymex went down," he added.
hursday's EIA inventory report is anticipated to show a thin withdrawal putting still more market pressure to the sell side. Last year a robust 79 Bcf was pulled from storage and the five-year average stands at 113 Bcf. A Reuters poll of 26 traders and analysts showed an average 4 Bcf withdrawal with a range of a 15 Bcf pull to a 7 Bcf build. Citi Futures Perspective is looking for a draw of just 7 Bcf and Bentek Energy's North American flow model predicts a decline of 3 Bcf.
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