US natural gas futures slipped on Wednesday following the release of a federal report showing an expected, smaller-than-usual weekly storage draw.
Traders noted the market was already trading down a bit before the US Energy Information Administration (EIA) released its report on forecasts for less cold weather over the next two weeks than previously expected.
The EIA, which released the report a day earlier than usual due to the US Thanksgiving holiday on Thursday, said utilities pulled just 28 billion cubic feet (bcf) of gas from storage during the week ended Nov. 22.
That matches analysts' estimates in a Reuters poll and compares with a withdrawal of 70 bcf during the same week last year and a five-year (2014-18) average decline of 57 bcf for the period.
The decrease cut stockpiles to 3.610 trillion cubic feet (tcf), 0.9% below the five-year average of 3.641 tcf for this time of year.
On its first day as the front-month, gas futures in the most active contract for January delivery on the New York Mercantile Exchange were down 2.4 cents, or 1.0%, to $2.509 per million British thermal units at 12:07 p.m. EST. On Tuesday when the lower-priced December future was still the front-month, the contract closed at its lowest since Oct. 28.
Before the EIA released the storage report, the front-month was down 0.6%.
Analysts said stockpiles will likely return to a surplus over the five-year average during the next month or so as rising production enables utilities to leave more gas in storage.
Gas production in the US Lower 48 states eased to 95.6 billion cubic feet per day (bcfd) on Tuesday from a record 96.0 bcfd on Monday, according to data provider Refinitiv. That compares with an average of 95.3 bcfd last week.
With less cold expected, Refinitiv cut its projection for average gas demand in the Lower 48 states, including exports, to 114.4 bcfd for next week from its previous forecast of 117.8 bcfd on Tuesday.
That compares with a forecast of 107.5 bcfd for this week.
Gas flows to liquefied natural gas (LNG) export plants rose to 6.9 bcfd on Tuesday from a four-week low of 6.6 bcfd on Monday due mostly to brief declines at Cheniere Energy Inc's Sabine Pass in Louisiana and Corpus Christi in Texas, according to Refinitiv data. That compares with an average of 7.3 bcfd last week and an all-time daily high of 7.7 bcfd on Nov. 2.
Pipeline flows to Mexico, meanwhile, edged up to 5.4 bcfd on Tuesday from 5.1 bcfd on Monday, according to Refinitiv data. That compares with an average of 5.4 bcfd last week and an all-time daily high of 6.2 bcfd on Sept. 18.