EIA Draw Below Projections, Surplus Weighs on Natural Gas Futures

Natural Gas Storage Draw Misses Expectations, Market Sentiment Softens

The latest EIA report revealed a 116 Bcf draw from U.S. natural gas storage for the week ending December 27, 2024. This fell short of market expectations, with traders anticipating a 127 Bcf withdrawal. The smaller-than-expected decline has tempered bullish sentiment, keeping prices under pressure.

Storage Draw Falls Below Forecasts

Working gas in storage stood at 3,413 Bcf, reflecting a net decrease of 116 Bcf from the previous week. Analysts had projected a larger draw of 127 Bcf, with colder weather expected to drive stronger heating demand. The miss signals softer consumption patterns or resilient supply, contributing to weaker price momentum.

Inventory Surplus Cushions Market

Despite the draw, natural gas inventories remain 154 Bcf above the five-year average of 3,259 Bcf. This surplus highlights continued supply security, dampening concerns of tightness as winter progresses. Total working gas remains within the five-year historical range, reinforcing stable supply dynamics.

Year-Over-Year Deficit Shrinks

Storage levels are 67 Bcf below the same period in 2023, reflecting tighter conditions compared to last year. However, the narrowing deficit indicates that recent mild weather has curbed demand, limiting aggressive withdrawals from storage.

Traders Monitor Surplus Levels

With inventories still elevated above seasonal averages, the market maintains a bearish tone. Traders are closely watching for shifts in weather patterns or unexpected supply constraints that could reduce the current surplus. Until such changes materialize, prices are likely to face downward pressure.

Market Impact

The smaller-than-expected storage draw reinforces a bearish short-term outlook for natural gas. If milder temperatures persist and withdrawals continue to underperform expectations, prices could soften further. However, any cold snap or supply disruptions could quickly tighten the market, offering brief bullish catalysts.

More Information in our Economic Calendar.