US gas storage likely falls less than half five-year average for final week of 2021

The final weekly gas draw of 2021 looks to measure less than half the five-year average, mimicking most of the heating season thus far, as inventories continue to gain on historical norms.

The US Energy Information Administration is expected to report a 50 Bcf withdrawal for the week-ended Dec. 31, according to a survey of analysts by S&P Global Platts. Responses to the survey ranged from a 40 Bcf to a 59 Bcf withdrawal. The EIA plans to release its weekly storage report on Jan. 6.

A 50 Bcf withdrawal would be less than half the five-year average draw of 108 Bcf and the 127 Bcf pull reported during the corresponding week in 2021. It would reduce stocks to 3.176 Tcf. The deficit to 2021 would decrease to 173 Bcf. The surplus to the five-year average would expand to 77 Bcf.

The last week of 2021 saw an especially paltry storage withdrawal, which is a fitting close for a year marked by abnormal storage activity. So far this heating season, a total of 385 Bcf has been pulled from storage, according to EIA data. Over the three years prior, inventories declined by an average of 500 Bcf over the same time frame.

Storage inventories started 2021 at a surplus to historical averages before plunging deeply below average as operators pulled massive quantities out during the historic winter storm in February. This left inventories with a steep deficit relative to normal levels. Throughout the course of the injection season it was never clear the deficit would be recovered from, given the growth in LNG exports and the stubbornness of production to respond to rising prices.

But with Hurricane Ida in late August, the market turned a distinctive corner. From that point on through the rest of the injection season, inventories consistently rose at a faster-than-normal clip, helping bring this year's inventory levels within reach of normal levels before the winter demand season began. Early prognostications for a possibly colder-than-normal winter have all been silenced by two months of consistently mild weather.

That, together with the eventual response from producers, has left balances significantly looser than anticipated, and has left a lot more gas in storage than many bulls would have liked to see. However, three full months of the winter heating season remain, and last year demonstrated how quickly the market can change.

Currently, storage is amply stocked, though Platts Analytics expects much larger withdrawals in the weeks ahead. That starts with the week in progress, where frigid weather across much of the country is driving an expected draw of 169 Bcf for the week ending Jan. 7.

Colder weather across the US is driving storage draws higher almost across the board, with all regions except for the Pacific expected to see a large ramp-up week over week, according to Platts Analytics.

In the South Central region, pipeline nomination data points to a total turnaround going from a roughly 16.5 Bcf net injection in the final week of December 2021 to a roughly 16.6 Bcf withdrawal in the week ending Jan. 7.