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Natural gas prices experienced a marginal decline of -0.19%, settling at 211.9, influenced by record-high domestic production in the US, leading to elevated inventories that are currently 10% above the seasonal average. The latest data revealed that US utilities withdrew 87 billion cubic feet of natural gas from storage during the week ending December 22, surpassing market expectations for a 79 bcf draw. This contrasts with the withdrawal of 195 bcf during the same week in the previous year and a five-year (2018-2022) average decrease of 123 bcf for this time of the year. The surge in natural gas production has allowed utilities to build reserves, contributing to the current surplus.
Meteorologists forecasted warmer-than-normal weather through December 30, followed by a shift to near or colder-than-normal temperatures from December 31 to January 6. The warmer weather has limited heating demand, as businesses and government offices were closed for the Christmas week. Financial firm LSEG projected US gas demand in the Lower 48, including exports, at 120.5 billion cubic feet per day (bcfd) this week, down from the previous week’s 126.6 bcfd. However, demand is anticipated to rise to 130.7 bcfd during the next week as colder temperatures are expected in January.
From a technical perspective, the natural gas market is currently witnessing long liquidation, with a drop in open interest by -1.91% to settle at 25880. Natural gas finds support at 208.8, and a breach below this level could lead to a test of 205.6. On the upside, resistance is identified at 214.6, and a move above could see prices testing 217.2.
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