Cold Weather Spurs Accelerated Gas Inventory Drawdowns

With colder weather forecast over the coming weeks after frigid conditions sent household heating demand surging, natural gas has numerous factors backing up recent price gains.

The next two weeks are expected to result in freezing conditions across nearly all of the lower 48 states, resulting in heightened demand and diminished supply.  Already supply is experiencing faster than anticipated drawdowns, with the latest figures from the EIA showing that gas in underground storage fell by 237 BCF compared to analyst expectations of a 222 BCF draw.

Nevertheless gas prices fell after the announcement, pulling back from recent multi-year highs before rebounding modestly during the Asian overnight session.  Oil prices are trending slightly higher after comparable inventory figures showed another surprising inventory build and production which fell modestly.

With holiday trading volumes that are well below average, equities came under renewed pressure on Thursday, extending Wednesday’s losses. Bank shares weighed on equity benchmarks as traders looked to close out remaining positions ahead of 2017.

During the American cash equity session, the S&P 500 lost 0.66 points, or -0.03% while the Nasdaq Composite dropped by -0.12% to 5,432.09 and the Dow Jones Industrial Average declined 13.9 points. The Dow has not yet surpassed the 20,000 after frequently coming within 20 points of what was hailed as a likely breakthrough.

Citigroup, Morgan Stanley and Bank of America all fell at least -1.00%. S&P 500 futures have gained 9.30% over the last 52-week, namely due to a post-election surge that has some market participants nervous about a potential correction in early 2017.