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US natural gas working stocks likely to fall by 50 Bcf last week: survey

Highlights

Figure less than one-third of five-year average

Henry Hub futures remain weak

Denver — US natural gas in storage likely fell at a rate of less than one-third the five-year average as 2019 ended with unseasonably warm weather across much of the country.

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The US Energy Information Administration is expected to report a 50 Bcf pull from gas storage stocks for the week ended January 3, according to an S&P Global Platts survey of analysts. Responses to the survey ranged from draws of 41 Bcf to 63 Bcf. The EIA plans to release its weekly storage report at 10:30 am EDT Thursday.

A 50 Bcf withdrawal would be much less than the 94 Bcf pulled in the corresponding week last year as well as the five-year average draw of 184 Bcf. A withdrawal within expectations would decrease stocks to 3.142 Tcf and the surplus to the five-year average would rise to more than 100 Bcf.

The draw would also be weaker than the 58 Bcf reported for the week ended December 27.

The last few days of 2019 and first few of 2020 saw lower demand compared with the previous week, as total US demand came in roughly 3.1 Bcf/d lower, leading to the smaller withdrawal, according to S&P Global Platts Analytics. Also, week-on-week supplies were down slightly, by about 160 MMcf/d, when net flows among the US, Canada, and Mexico were taken into account.

Temperatures across the US fell 1 degree week on week, led by the Rockies, which saw temperatures drop 12 degrees. But in the higher-demand Midwest region, the change was less severe, and in the Northeast and Southeast, temperatures rose week on week.

Warmer weather in the eastern US, combined with the effects of the end-of-year holidays, resulted in a 1.8 Bcf/d decline in residential-commercial demand and a 1.1 Bcf/d decline in gas-fired generation demand.

Looking ahead to the week ending January 10, total US demand is on the upswing, currently averaging close to 4.2 Bcf/d above the week prior, according to Platts Analytics. Also, lower production in the Northeast and Texas is affecting supplies, which are averaging roughly 400 MMcf/d lower week on week.

Platts Analytics' supply-and-demand model currently expects a 90 Bcf draw for the week in progress. While the pull appears bullish compared with the week prior, it is still only about half of the five-year-average draw, according to EIA data. An even smaller draw is expected for the week ending January 17

If the forecast holds, the surplus to the five-year average could eclipse 300 Bcf by mid-January, which would mark the largest surplus since April 2017.