Key Points: Our analysis leads us to expect the EIA to report later this week that there was a 28 billion cubic feet (Bcf) withdrawal for the week ended Jan. 4 (lower than the current 48 Bcf consensus withdrawal expectation and lower than the 161 Bcf five-year average withdrawal).

As we outline below, there are several neutral or negative drivers for prices this week, which colors our view of what is happening to gas prices this week.

Supply: Positive

Average field supply is likely to show a w-o-w decline of more than 1.6 Bcf/d, but rising seasonal Canadian imports added 0.3 Bcf/d of supply into the market. Overall, we see supply as being a weak positive this week.

Storage: Negative

We estimate a storage withdrawal of 28 Bcf will be reported by EIA this week for the week ended January 4, 2019. That's far below the five year average 161 Bcf draw. Initial indications suggest little likelihood of returning to a stronger pull next week, which, normally for the second week of January would amount to over 200 Bcf. All in, we see the storage changes as a negative driver for gas prices this week.

Weather: Negative

The new year’s natural gas market has cooled off as winter temperatures have heated up, resulting in heating demands that appear to be lower than those seen in the first weeks of winter 2018-2019. We see moderating weather effects as being a negative driver for natural gas price action this week.

Demand: Neutral

The report coming Jan. 10 is likely to indicate sub-par industrial demand as a result of holiday schedules around the New Year’s celebration. A normal workweek will be reflected in next week’s industrial and utility demand levels. So we would anticipate a combined neutral effect of demand side on prices this week.

Flows: Neutral

We see flows as a neutral driver this week. There were no freeze-offs and no new upset conditions for the week ended January 4, 2019.

Trader Sentiment: Neutral

We anticipate little positive reaction to the overall report on Jan. 10 since the storage level is likely to be vastly below normal. Natural gas prices have come down considerably into the sub-$3 range per MMBtu after having neared $45/MMBtu earlier in the winter. We anticipate therefore neutral sentiment this week from a trading standpoint.