Natural Gas Surges Following Larger-Than-Anticipated Inventory Decline

• The amount of working natural gas in storage decreased by 87 billion cubic feet compared to the previous week.
• The current natural gas stocks are 240 billion cubic feet higher than they were at this time last year.
• Following the release of the EIA report, natural gas is attempting to build further upward momentum.

 The Weekly Natural Gas Storage Report released by the EIA on December 21 revealed a decrease of 87 Bcf in working natural gas in storage from the previous week, differing from the expected decline of -80 Bcf according to analysts.

Currently, stocks are 240 Bcf higher than they were at this time last year and 280 Bcf above the five-year average. The substantial surplus in stocks continues to exert downward pressure on natural gas prices.

Although the report highlighted a larger-than-anticipated draw, it's important to note that the draw is notably smaller than the five-year average of -107 Bcf, potentially offering some backing to natural gas markets.

Unfavorable weather forecasts persist as a major issue for those bullish on natural gas. Mild weather conditions have led to low demand for natural gas. While January may see a shift to colder weather, it's advised that traders remain cautious as longer-term weather predictions are subject to significant changes as we approach the next month.

Following the EIA report, natural gas prices exhibited a positive response, which was expected given the significant decline in natural gas prices since early November. However, it remains uncertain whether natural gas will be able to sustain upward momentum and settle above the nearest resistance at $2.60 – $2.65.