We expect a -251 Bcf draw in the storage report for the week ended 1/13. A storage draw of -251 Bcf would be compared to a -178 Bcf draw last year and -183 Bcf draw for the five-year average. We revised lower our storage forecast from last week's Friday's by 4 Bcf as physical storage data was less bullish than we expected.
Our storage forecast this week is one of the more bullish estimates out there. Consensus average is around -230 Bcf, and if storage draw comes in around our estimate, there could be a bullish surprise to natural gas (NYSEARCA:UNG) prices. Any move, however, post the storage report will likely be washed out as storage reports for 1/20 and 1/27 will be exceedingly bearish.
Our current forecast pegs 1/20 and 1/27 materially below the average, and as a result, natural gas storage is expected to be back above the five-year average come the week of 1/27. However, be mindful that the market has likely already priced in the bearish storage reports for 1/20 and 1/27. The focus has been on the weather outlook for February and traders have already acknowledged that the rest of January is expected to show much higher temps than normal.
For now, natural gas participants will have this Thursday's storage report to contend with, and our outlier storage draw estimate will highlight just how severe the current structural imbalance is.
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