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US working gas in storage falls by larger-than-expected 137 Bcf: EIA

Highlights

Draw outside of range of analysts' expectations

Storage total now 30.8% higher on year

Denver — US working gas in storage dropped at a higher-than-expected rate last week, but still less than normal, as volumes pushed to 30% over this time last year, and futures remain flat.

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Storage inventories fell 137 Bcf to 2.609 Tcf for the week ended January 31, the US Energy Information Administration reported Thursday morning.

The pull was more than an S&P Global Platts' survey of analysts calling for a 126 Bcf withdrawal. It was even outside the range of those polled as the largest draw expected was 136 Bcf. But it was still weaker than the 228 Bcf pull reported during the corresponding week in 2019 and the five-year average draw of 143 Bcf, according to EIA data.

Massive storage volumes now tower 615 Bcf, or 30.8%, above the year-ago level of 2.222 Tcf and 199 Bcf, or 8.3%, more than the five-year average of 2.41 Tcf. Storage levels in the EIA's Midwest and South Central regions are now 36% and 34%, respectively, more than this date in 2019.

US level residential and commercial demand for the week ended January 31 fell 10.6 Bcf/d compared with the week prior, according to S&P Global Platts Analytics data.

The warmer-than-normal winter has dramatically weakened residential and commercial demand year on year throughout the season. Winter-to-date residential and commercial demand has averaged 38.9 Bcf/d, down 3.7 Bcf/d winter on winter, according to Platts Analytics.

The NYMEX Henry Hub March contract was static at $1.861/MMBtu in trading following the weekly storage report.

Barring any major forecast changes, as weather across major demand regions looks to disappoint in February, there appears to be little upside for balance-of-winter prices. Notably, the price curve is fully upward-sloping over the next 12 months, rising from $1.89 in March to $2.56 next January, before tapering down slightly in February 2021.

Platts Analytics' supply-and-demand model forecasts an 88 Bcf draw for the week ending February 7, which is 43 Bcf below the five-year average. The following week also shows a potential draw of less than 100 Bcf.

The week in progress has seen fundamentals continue to widen, with demand falling amid a measurable recovery in onshore production. Total demand is down 3.4 Bcf/d week on week to an average 109 Bcf/d, with declines spread across most downstream sectors, but with residential and commercial driving the largest share of the drop. Upstream, total supplies are up 0.7 Bcf/d at an average 96.2 Bcf/d, led by a roughly 0.5 Bcf/d increase in onshore production volumes.

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