Waning US demand likely prompted a below-average draw from storage last week as the withdrawal season winds down rapidly following February's brutal winter storm as Henry Hub futures continue to decline.
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When compared with the week prior, when a 98 Bcf withdrawal was reported, warming temperatures and soft demand interacted with recovering production to loosen balances, according to S&P Global Platts Analytics.
The US Energy Information Administration is expected to report a 65 Bcf withdrawal for the week ended March 5, according to a survey of analysts by S&P Global Platts. Responses to the survey ranged from a 42 to an 86 Bcf withdrawal.
The largest week-over-week change regionally came from the South Central region where sample activity flipped to a net injection of 9 Bcf. The region posted a net change of zero for the week ended Feb. 26. It is becoming increasingly clear salt dome facilities have started to inject for the upcoming cooling season – with salt operators having injected on a net basis the past two weeks, according to Platts Analytics.
Regarding US production, output rebounded 5.5 Bcf/d week over week – with the weekly average now fully recovered when compared to pre freeze-off levels. Higher US production and softening demand pushed back on other sources of supply, with LNG sendouts and net Canadian imports falling by 200 MMcf/d and 1.5 Bcf/d, respectively.
US demand has come down sharply on the week due to warmer temperatures. Total demand dropped more than 6 Bcf/d week over week, with residential and commercial losses accounting for almost all the declines.
A 65 Bcf draw would be weaker than the 72 Bcf withdrawal reported in the corresponding week last year as well as the five-year average draw of 89 Bcf. A withdrawal within expectations would decrease stocks to 1.780 Tcf. The deficit to the five-year average would decrease to 154 Bcf, and the deficit to 2020 would slide to 270 Bcf.
Henry Hub cash prices averaged near $2.70/MMBtu for the week ended March 5 – well below the prior week's average of $4.40/MMBtu. The softening prices drove stronger weather-normal gas burns, with gas's share of thermal generation averaging 61% – well above the 53% level realized during the prior week, according to Platts Analytics.
The NYMEX Henry Hub April contract dipped 1 cent to $2.65/MMBtu during trading on March 9.
Platts Analytics' supply and demand model expects a meager 27-Bcf draw for the week-ending March 12, which would measure 22 Bcf less than the five-year average. An early view for the week ending March 19 shows an even smaller pull of 14 Bcf.
The EIA plans to release its weekly storage report at 10:30 am ET on March 11.