US gas storage inventories look to post first triple-digit draw of season

US natural gas storage fields are poised to post the first triple-digit withdrawal of the season as a mild winter has calmed concerns of the inadequate inventories observed during the summer.

The US Energy Information Administration is expected to report a 127 Bcf withdrawal for the week-ended Dec. 24, according to a survey of analysts by S&P Global Platts Dec. 28. Responses to the survey ranged from a 120 to 135-Bcf withdrawal. The EIA plans to release its weekly storage report on Dec. 30.

The first 100-plus Bcf withdrawal of the season comes several weeks later than normal, and is likely to be the last of the year as weather has swung milder in the final week of 2021. Sample pipeline data for the week in progress shows a substantial slowdown in withdrawal rates across the Lower 48 states. This is particularly so in the South Central where the salt-dome storage facilities look to be net injecting into storage amid record-breaking warm weather across much of the Southern US, according to Platts Analytics.

A 127 Bcf withdrawal would be more than the five-year average draw of 121 Bcf and the 120 Bcf pull reported during the corresponding week in 2020. It would reduce stocks to 3.235 Tcf. The deficit to 2020 would increase to 241 Bcf. The nascent surplus to the five-year average would decrease slightly to 28 Bcf.

The NYMEX Henry Hub January contract shed 1 cent to $4.05/MMBtu on Dec. 28.

A forecast by Platts Analytics calls for a mere 49 Bcf drawdown for the final week of the year, which would measure less than half the average withdrawal.

Inventories are rebounding above normal in most US regions as the winter heating season nears its third month. For example, Northeast storage inventories sit at 843 Bcf. This is 25 Bcf below last year, but 22 Bcf higher than the five-year average, Platts Analytics data shows.

December withdrawal rates have averaged 3.3 Bcf/d as of Dec. 28. If that trend continues for the next few days of 2021, 2022 could start with inventories just below 830 Bcf. Northeast inventories have fallen 466 Bcf from January through March over the past five years. If the remainder of this winter follows suit, the Northeast could see inventories at 364 Bcf by April 1, 37 Bcf above the five-year average at the end of winter. This could lead to less production needed in 2022 compared to 2021 and place downward pressure on prices this summer, according to Platts Analytics.