Denver — US natural gas in storage fell by 130 Bcf last week, with an even larger draw likely for the week in progress due to continued strong LNG export demand coupled with production losses in Texas. Henry Hub futures remain stagnant, however, as the storage surplus looks to expand in the weeks ahead.
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Storage inventories decreased to 3.330 Tcf for the week ended Jan. 1, the US Energy Information Administration reported Jan. 7. The withdrawal was less than an S&P Global Platts survey of analysts calling for a 139 Bcf pull. Responses to the survey ranged from a 121 to 157 Bcf withdrawal. The pull was much stronger than the 48 Bcf draw reported during the same week last year as well as the five-year average withdrawal of 115 Bcf, according to EIA data.
The draw also proved stronger than the 114 Bcf pull reported for the week prior.
Gas prices were bid up this week heading into the EIA storage report as both the European and American ensemble weather models gained heating degree days for January compared with last week. In focus is the weakening of the polar vortex and the potential for a colder base state in the back half of the month.
The NYMEX Henry Hub February contract slipped 4 cents to $2.68/MMBtu in trading following the release of the weekly storage report at 10:30 am ET.
US supply and demand balances were tighter as HDDs increased 10% week on week. Colder weather pushed residential and commercial demand 4.1 Bcf/d higher week on week – leading to a 3.9 Bcf/d increase in total US demand relative to the prior week, according to S&P Global Platts Analytics. Higher demand was met with flat total supply, increasing the call on storage to balance.
Storage volumes now stand 138 Bcf, or 4.3%, more than the year-ago level of 3.192 Tcf and 201 Bcf, or 6.4%, more than the five-year average of 3.129 Tcf.
S&P Global Platts Analytics' supply and demand model currently forecasts a 139 Bcf withdrawal for the week ending Jan. 8, which would increase the surplus to the five-year average by 22 Bcf.
The week in progress has seen balances loosen as milder weather pushed residential and commercial demand 3.8 Bcf/d lower week on week – leading to US demand declines of 2.5 Bcf/d. Lower demand was met with higher total supply gains of 600 MMcf/d week on week as LNG exports and net Canadian imports rose 200 and 300 MMcf/d, respectively.
Sample storage withdrawals for the US retracted just 4.6% for the week in progress, dropping to 52.2 Bcf from 54.7 Bcf, according to Platts Analytics. Every region across the US, except for the Midwest, saw a reduced call on storage. The East and Pacific samples led the declines, falling by 2 and 3 Bcf, respectively, largely as a result of temperatures climbing 3 degrees Fahrenheit in both regions, dampening demand.