US natural gas storage draws 153 bcf, futures down

07 January 2010 17:09  [Source: ICIS news]

HOUSTON (ICIS news)--Last week 153bn cubic feet (bcf) of natural gas was delivered out of US underground storage, the Energy Information Administration (EIA) reported on Thursday, putting the draw within analysts' forecasts and futures on a slightly downward course.

Stockpiles fell from 3,276 bcf to 3,123 bcf in the week ended 1 January, according to the EIA - marking a deeper decline than last year as cold weather swept through the US midwest.

Analysts' predictions averaged withdrawals of 146-154 bcf last week. Last year, a 47 bcf draw was reported during the same week and the five-year average pull is 75 bcf.

As of 11:05 New York time (17:05 GMT) on the NYMEX, the front-month February contract was down by 2 cents to $5.989/MMBtu.

The report was a non-event for Thomas Orr, managing director of research at brokerage firm Weeden and Company in Greenwich, Connecticut.

Orr explained that industrial demand was artificially compressed over the last two reporting weeks with Christmas Day and New Year's Day both falling on a Friday in the US. 

"At least 25 (bcf) of demand was chipped away with so many companies being shut," Orr said.

Stephen Schork, editor of the energy newsletter The Schork Report, explained that the market would already be looking at next week's report as bitterly cold weather engulfs most of the US this week.

"After we get through this morning’s report we face the prospects of another large triple-digit delivery for next week," Schork said.

Orr agreed, adding that next week's EIA report could reveal a draw of 250 bcf or more, possibly pushing futures prices to $6.15-6.25/MMBtu.

Futures prices broke the $6 mark on 6 January for the first time since January 2009.

Natural gas pricing is a key bellwether for chemical commodity values with the fuel's extensive use as a power supply and raw material.

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By: Ryan Hickman
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