US natural gas prices are slightly higher through Asia-Pacific trading after prices dropped over 5% overnight. Currently, the US benchmark is on track to record a monthly loss of around 15%, which would make December the third month of consecutive losses. A warmer-than-expected start to the winter across North America has been the main headwind for prices in recent months.
However, a bout of expected cold temps across the Northern Plains may underpin prices. The National Weather Service’s 8-14 day temperature outlook (NOAA) shows mercury readings will likely dip below the historical averages. Alaska and Southern California are also showing an increased chance for cold weather in early January. Natural gas is heavily relied upon as a heating fuel, making prices highly susceptible to weather trends.
Tonight will see an inventory report cross the wires for the United States for the week ending December 24. The Energy Information Administration (EIA) is expected to report a draw of 128 billion cubic feet (bcf), according to a Bloomberg survey of economists. A larger-than-expected draw may help support prices, especially if the expected cold snap plays out. EIA data shows natural gas stocks are 34 bcf below the five-year average. The unseasonably warm weather so far this winter has helped inventory levels normalize over the past few weeks.
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