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US natural gas storage fields draw more than 200 Bcf for fourth straight week

Highlights

Henry Hub summer strip remains above $4/MMBtu

Smaller gas storage pulls likely in weeks ahead

US natural gas storage volumes fell by more than 200 Bcf for the fourth week, but milder weather could slow withdrawals in the weeks ahead as the Henry Hub summer strip remains above $4/MMBtu.

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Storage fields withdrew 222 Bcf for the week ended Feb. 4, according to US Energy Information Administration data released Feb. 10.

The pull was well within and barely above the 221 Bcf draw an S&P Global Platts survey of analysts expected. Responses to the survey were withdrawals in a 211-235 Bcf range. The drawdown outpaced the five-year average of 150 Bcf and the 174 Bcf pull in the corresponding week a year ago.

Working gas inventories fell to 2.101 Tcf. US storage volumes now stand 441 Bcf, or 17.3%, below the year-ago level of 2.542 Tcf and 215 Bcf, or 9.3%, below the five-year average of 2.316 Tcf. 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 early 2022 on a mix of lower US population-weighted temperatures, production declines, and strong LNG exports.

The NYMEX Henry Hub March contract slid 3.5 cents to $3.97/MMBtu following the release of EIA's storage report. The upcoming summer strip fell 2.5 cents to average $4.04/MMBtu.

Significantly stronger demand, coupled with lower production, has pulled hard on US storage inventories during January and into February, lowering expectations for the end-of-winter inventories to 1.65 Tcf, 10 Bcf below five-year levels. Tighter balances in January pushed the NYMEX Henry Hub 2022 curve to $4.03/MMBtu as of Jan. 25, 12 cents above the current Platts Analytics forecast of $3.91/MMBtu, from a low of $3.62/MMBtu Dec. 23.

A Platts Analytics forecast calls for a 190 Bcf draw for the week ending Feb. 11, which would increase the deficit to the five-year average by 36 Bcf. However, an early forecast for the week ending Feb. 18 shows a pull about 30 Bcf smaller than average.

Total US demand fell 5.6 Bcf/d Feb. 9 to 113.5 Bcf/d. US residential-commercial demand fell 4 Bcf/d while US power burn fell 1.7 Bcf/d as average US population-weighted temperatures climbed nearly 2 degrees. The Rockies was the only region to see an increase in res-comm demand, up 0.4 Bcf/d, as population-weighted temperatures fell more than 4 degrees in the region.

Power burn declines were concentrated in the Southeast, which was down 1 Bcf/d. The Upper Midwest and the Northeast each saw a 300 MMcf/d decline in power burn. Total US supply was flat on a net basis, as a 700 MMcf/d increase in US production was offset by a 500 MMcf/d decline in Canadian imports and a 200 MMcf/d decline in LNG imports.