U.S. natural gas futures were steady on Thursday, giving up gains that followed a slightly larger-than-expected withdrawal from storage as focus returned to bearish signals from a slide in European markets.
The U.S. Energy Information Administration (EIA) said utilities pulled 59 billion cubic feet (bcf) of gas from storage during the week ended Dec. 3.
That was higher than the 54-bcf draw analysts forecast in a Reuters poll and compares with a decline of 78 bcf in the same week last year and a five-year (2016-2020) average decline of 55 bcf.
Front-month gas futures inched up 1.6 cents, or 0.4%, to $3.831 per million British thermal units (mmBtu) at 11:20 a.m. EST (1620 GMT).
“The period of this storage announcement covers the weekend after Thanksgiving, and gas usage over holiday weekends is always difficult to predict,” Refinitiv analyst John Abeln said.
“So while there was a small bullish signal, it is not enough to cause significant market movement.”
Last week’s withdrawal reduced stockpiles to 3.505 trillion cubic feet (tcf), or 2.5% below the five-year average of 3.595 tcf for this time of year.
Meanwhile, European and British wholesale gas prices fell on Thursday following a sharp rise in flows from Norway after the end of an outage at the Troll field and an expected drop in demand amid milder weather.
Looking ahead, many analysts expect mild weather forecast for coming weeks will allow U.S. utilities to leave enough gas in storage to cause stockpiles to reach above-normal levels by mid-December. That would be the first time storage would be at above normal levels since April.
In recent months, global gas prices hit record highs as utilities around the world scrambled for liquefied natural gas (LNG) cargoes from the United States and elsewhere to replenish low stockpiles in Europe and meet surging demand in Asia, where energy shortfalls have caused power blackouts in China.
Following those global gas prices, U.S. futures jumped to a 12-year high in early October but have since pulled back because the United States has plenty of gas in storage and ample production for winter. Overseas prices were currently trading about nine times higher than U.S. futures.
But no matter how high global gas prices rise, the United States only has the capacity to turn about 11.1 bcfd of gas into LNG. The rest of the gas flowing to the export plants is used to fuel equipment that produces the LNG.