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Natural Gas Inventories Below Average as Winter Season Begins

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The winter withdrawal season has begun with a warmer-than-normal start, resulting in below-average draws on U.S. natural gas inventories for the second consecutive week. As a result, the demand for heating fuel has remained relatively low.

According to a survey conducted by The Wall Street Journal, natural gas in underground storage is estimated to have decreased by 84 billion cubic feet last week, bringing the total to 3,580 Bcf. The estimates provided by 12 analysts, brokers, and traders range from a draw of 76 Bcf to 96 Bcf. This is significantly lower than the five-year average draw of approximately 107 Bcf for the same week.

This reduction in storage levels would mark the third consecutive week of decline and the second week below-average, following last week’s 55 Bcf withdrawal.

The mild weather conditions at the beginning of winter resulted in prices hitting their lowest point in six months. Despite some relief rallies, prices have been limited due to forecasts indicating that December will remain predominantly warm. As of Wednesday, natural gas for January delivery was down 0.7% at $2.475 per million British thermal units, still about 10% higher than last week’s lows.

The Energy Information Administration is scheduled to release its weekly storage report on Thursday at 10:30 a.m. EST.

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