US natural gas storage volumes declined less than the market expected for the second consecutive week, weighing again on prices as only three net draws likely remain before injection season begins.
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Storage inventories decreased by 52 Bcf to 1.793 Tcf for the week ended March 5, the US Energy Information Administration reported the morning of March 11.
The withdrawal was weaker than the 65 Bcf draw expected by an S&P Global Platts survey of analysts. It was also less than the 72 Bcf draw reported during the same week last year and the five-year average withdrawal of 89 Bcf.
The draw was well below the 98 Bcf pull reported for the week prior as production rebounded 5.5 Bcf/d week over week, according to S&P Global Platts Analytics. Higher US production and softening demand pushed back on other sources of supply, with Canadian imports falling 1.5 Bcf/d. US demand came down sharply on the week alongside a warm-up in temperatures. Total demand dropped more than 6 Bcf/d week over week, with residential and commercial losses accounting for almost all the decline.
After last week's massive storage miss, uncertainty was high heading into the March 11 EIA report. Survey responses ranged from a draw of 42 to 86 Bcf. This uncertainty led to gas prices trading in a relatively tight range over the course of the week, with the April NYMEX shifting between $2.60/MMBtu and $2.70/MMBtu.
The Henry Hub April contract slipped 3 cents to $2.65/MMBtu in trading following the release of the weekly storage report. Outside of the uncertainty created by last week's EIA report, benign weather forecasts and sizeable wind generation also kept a lid on pricing.
Storage volumes now stand 257 Bcf, or 12.5%, less than the year-ago level of 2.050 Tcf and 141 Bcf, or 7.3%, less than the five-year average of 1.934 Tcf.
Platts Analytics' supply and demand model currently forecasts a 22 Bcf withdrawal for the week ending March 12, which would measure 37 Bcf weaker than the five-year average, as the withdrawal season enters its final month.
Sample activity for the week ending March 12 continues the bearishness seen over the last month. The East and Pacific are the only regions still reporting net withdrawals this week, while the Midwest, Mountain and South Central regions have already begun to make up lost ground, injecting a combined 18 Bcf into storage.
The South Central salt domes, which began replenishing stocks immediately after the February cold front abated, have pushed even further this week to a 14 Bcf build.
An early forecast for the week ending March 19 points to a pull less than 30 Bcf. Over the past five years, the week ending March 26 typically marks the final net withdrawal of the heating season, according to EIA data. It has measured as an average draw of 24 Bcf.