Natural gas prices dip 3% as stockpiles 17% higher on the year

By Barani Krishnan

Investing.com -- Natural gas prices fell 3% Thursday after the U.S. government said inventories of the heating fuel were 17% higher than a year ago, delivering another stinging data to those long on the trade amid an unusually warm winter. 

Utilities drew a lower-than-forecast 100 bcf, or billion cubic feet, from U.S. natural gas storage for heating and electricity generation last week, according to the EIA weekly report on gas supply-demand.

Analysts tracked by Investing.com had expected the EIA, or Energy Information Administration, to report a draw of 109 bcf for the week ended Feb. 10, less than half of the prior week’s consumption of 217 bcf.

Worse were total stockpiles of gas, which closed last week at 2.266 tcf, or trillion cubic feet, up 16.9% from the year-ago level of 1.938 tcf.

Still, gas prices did not crater on the data, having lost two-thirds of their value over the past two months. With the market seeking more clarity on the potential for cold before winter ends in five weeks, prices have bounced back and forth in the mid $2 levels.

The front-month March gas contract on the New York Mercantile Exchange’s Henry Hub settled at $2.3890 per mmBtu, or metric million British thermal units, down 8.2 cents, or 3.3%, on the day.

March gas sank to a 20-month low of $2.341 after the previous storage report on Feb. 3. Prior to that, the lowest for a front-month gas contract on the Henry Hub was $2.02, a level struck on Sept. 28, 2020.

An unusually warm start to the 2022/23 winter season has led to considerably less heating demand in the United States versus the norm, leaving more gas in storage than initially thought.

Responding to the warmth and lackluster storage draws, gas prices plunged from a 14-year high of $10 per mmBtu in August, reaching $7 in December and mid-$2 levels over the past three weeks.