Many industry experts had expected to see the first withdrawal of natural gas this morning. But instead of getting the 2 bcf withdrawal that was expected, the first natural gas storage report of December showed an injection of 2 bcf.
To put this in perspective, during the same week last year the Energy Information Agency reported a withdrawal of 64 bcf. The five year average for this week has been a 43 bcf withdrawal. Typically we start to see a draw down of supply in November.
This now leaves our natural gas supply brimming at 3,837 bcf, which is 14.5% above the five year average, and 14% above last year’s level. Of course, these numbers are a reflection of the week of Thanksgiving where we often see a slight dip in natural gas usage in the industrial sector due to the holiday.
Looking to next week it will be interesting to see if the latest blast of winter weather will finally be enough usher in the withdrawal season. My guess is that we will in fact see a modest withdrawal next week. Failure for this to materialize could signal even weaker demand than is currently assumed.
For commercial buyers of electricity and natural gas the latest report means you have another week to contemplate whether we have seen the market bottom. One thing for sure is that every economic data point that is released in the coming weeks will be closely watched as traders, analysts, speculators and consumers try to determine where we go from here. Prudent business electricity and natural gas users will want to be prepared to make necessary strategy adjustments based the data released in the next month.