First US gas storage withdrawal of 2022 looks to dwarf final draw of 2021

The first week of 2022 likely saw a US natural gas storage draw well above historical norms as cold weather finally arrived to all regions, including the South Central, where activity switched from a net injection to a sizable withdrawal week over week, pushing the Henry Hub prompt month back above $4/MMBtu.

The US Energy Information Administration is expected to report a 177 Bcf withdrawal for the week-ended Jan. 7, according to a survey of analysts by S&P Global Platts. Responses to the survey ranged from a 164 Bcf to 185 Bcf withdrawal. The EIA plans to release its weekly storage report on Jan. 13 at 10:30 am ET.

The US gas market in early 2022 has been almost unrecognizable from the one in late 2021, with the arrival of significant winter weather in early January driving substantial tightening among supply-demand balances and production taking a breather after a sizable rally in late December, according to Platts Analytics. The first Weekly Natural Gas Storage Report of the year is expected show a 177 Bcf withdrawal, a nearly six-fold increase from the previous week's 31 Bcf withdrawal as colder weather has flipped storage flows in the South Central from net injections to withdrawals.

A 177 Bcf withdrawal would be more than the five-year average draw of 155 Bcf and the 134 Bcf pull reported during the corresponding week in 2021. It would reduce stocks to 3.018 Tcf. The deficit to last year would increase to 199 Bcf. The surplus to the five-year average would contract to 73 Bcf.

The start of the new year always leads to some complications, particularly with respect to comparing current inventory levels with the five-year average. The EIA has not yet released its updated five-year averages but is expected to do so with the release of the first storage inventory data for 2022.

The NYMEX Henry Hub February contract added 8 cents to $4.16/MMBtu during the trade day on Jan. 11 as US supply and demand fundamentals tightened. A forecast by Platts Analytics calls for an even larger draw of 194 Bcf for the week ending Jan. 14.

Sample pipeline nomination data for the week in progress shows continued increases in storage withdrawals in the three Eastern storage regions, the East, Midwest and South Central. Meanwhile, the Western US has seen storage withdrawals move in the opposite direction, slowing down in both the Mountain and Pacific storage regions.