US gas storage looks to post fourth consecutive draw of more than 200 Bcf

US natural gas storage stocks appear poised to post the fourth consecutive weekly draw north of 200 Bcf, further driving the nascent deficit, as the Henry Hub prompt stands $1.40/MMBtu above last year.

The US Energy Information Administration is expected to report a 221 Bcf withdrawal for the week ended Feb. 4, according to an S&P Global Platts survey of analysts. Responses to the survey ranged from pulls of 211 Bcf to 235 Bcf. The EIA is scheduled to release its weekly storage report Feb. 10.

It would be less than the previous week's reported 268 Bcf withdrawal, which was likely the largest of the season. Sustained cold weather, combined with production hiccups and ever-rising export demand, is expected to keep withdrawals running at a rate of 200 Bcf per week or more through at least mid-February, according to S&P Global Platts Analytics.

Another lofty withdrawal looks likely for the week in progress, but a warmer weather outlook may make it the final 200-plus Bcf draw of the heating season, which typically ends during the final week of March.

A 221-Bcf withdrawal would be more than the five-year average draw of 150 Bcf and the 174 Bcf pull reported during the corresponding week in 2021. It would reduce stocks to 2.102 Tcf. The deficit to last year would expand to 440 Bcf, while the deficit to the five-year average would climb to 214 Bcf.

Inventories have fluctuated widely this winter. As recently as mid-January, stocks sat at a slight surplus to the five-year average. The first two months of the heating season held mild weather and higher US production, but fundamentals changed significantly in 2022.

US gas production has seen a steep decline in January from December, falling 2.8 Bcf/d on the month to average 92.25 Bcf/d, according to Platts Analytics. Production declines are expected when starting a new year, averaging a decline of 1.3 Bcf/d the last five years, as producers push to meet year-end guidance levels in December and pull back to start the year.

This year, however, freeze-offs in areas like Texas have exaggerated the declines in 2022. Freezing temperatures on multiple occasions in January lowered the state's production by more than 700 MMcf/d month on month.

Total US demand jumped nearly 20 Bcf/d in January to average 123 Bcf/d as consistent cold weather, mainly in the Midwest and Northeast, finally showed up. The cold weather pushed residential-commercial demand 15 Bcf/d higher to average 52 Bcf/d on the month. Additionally, power demand sustained record levels in January near 31 Bcf/d not only on cold weather but depressed coal generation, driven by supply concerns, forcing gas to backfill.

The NYMEX Henry Hub March contract increased 6 cents to $4.29/MMBtu during the Feb. 8 trading day, about $1.40 above year-ago levels.

A Platt Analytics forecast calls for a draw of 203 Bcf for the week ending Feb. 11, expanding the deficit to the five-year average by about 50 Bcf.