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US natural gas storage inventories decline 129 Bcf as winter demand slackens: EIA


Larger pull likely for week in progress

Henry Hub futures fluctuate on Feb. 24

  • Author
  • Brandon Evans    Eric Brooks
  • Editor
  • Gary Gentile
  • Commodity
  • LNG Natural Gas

US natural gas inventories for the week ended Feb. 18 fell in line with market expectations, which was below the five-year average decline for the first time this year.

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Storage fields withdrew 129 Bcf, according to data released by the US Energy Information Administration on Feb. 24. Working gas inventories decreased to 1.782 Tcf. The storage deficit collapsed to 209 Bcf, or 10.5%, less than the year-ago level of 1.991 Tcf. The deficit to the five-year average narrowed to 214 Bcf.

The withdrawal was in line with the 128 Bcf draw expected by an S&P Global Platts survey of analysts. Responses to the survey ranged from a 107 to 143 Bcf withdrawal. The draw was a fraction last year's massive 324 Bcf pull in the corresponding week. That week marked the second-largest withdrawal on record as the US experienced a severe winter storm. The storm knocked a sizable share of domestic production offline, exacerbating the draw on storage fields.

The draw was also well below the week prior's 190 Bcf pull. US supply and demand fundamentals loosened considerably during the reference week as cold weather-driven demand subsided and production staged a significant rebound from the lows seen a week earlier.

Total demand during the week ended Feb. 18 was down 9.3 Bcf/d week over week, according to Platts Analytics. The majority of the decline was driven by the residential-commercial sector, followed by smaller losses in the power generation and industrial sectors. LNG feedgas was the only demand fundamental to see a gain week over week, rising 500 MMcf/d.

Upstream, total supplies were 3.2 Bcf/d higher on the week as production staged a nearly 4 Bcf/d rebound after tumbling a week earlier due to weather-driven freeze-offs. The thaw-out helped production not only recover from those declines but also return higher than before.

The NYMEX Henry Hub March contract fell 5 cents to $4.57/MMBtu during late afternoon trading on Feb. 24. The upcoming summer strip, April through October, added 4 cents to average $4.71/MMBtu.

Henry Hub futures prices were seen trading roughly 20 cents higher by mid-morning Feb. 24, with much of the run-up taking place even before the release of the Weekly Natural Gas Storage Report and likely being carried higher along with the large price movements in global energy markets stemming from the conflict in Ukraine, according to Platts Analytics. Notably, March basis futures for certain hubs have fallen sharply, such as Waha falling 20 cents for March, which indicates a fixed-price gravitation when it moves directionally opposite to the benchmark.

Market balances have trended tighter during the week in progress, setting the stage for a larger withdrawal for the week ended Feb. 25 which is currently estimated to be around the 150 Bcf mark, according to Platts Analytics.