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US gas demand extends lower, supply remains flat in week to Feb. 21

Natural gas demand in the U.S. continued to deflate on the back of warmer weather during the week ended Feb. 21, while supply remained constant amid steady production, the U.S. Energy Information Administration said in its latest "Natural Gas Weekly Update" released Feb. 22.

Total U.S. gas consumption sank by 14% week on week, from 86.5 Bcf/d to 74.8 Bcf/d.

Residential/commercial-sector demand fell from 39.5 Bcf/d in the previous report period to 30.1 Bcf/d in the current week, reflecting a 24% decline week over week primarily attributed to warmer weather in the eastern U.S. Power burn logged a 4% slump relative to the prior-week level as it faltered from 23.8 Bcf/d to 22.9 Bcf/d, while industrial-sector consumption notched a 6% reduction as it slipped from 23.2 Bcf/d to 21.9 Bcf/d.

Natural gas exports to Mexico were down 3% on the week, from 4.4 Bcf/d to 4.3 Bcf/d. Natural gas pipeline flows to the Sabine Pass liquefaction terminal tumbled by 33% week over week, from 3.2 Bcf/d to 2.1 Bcf/d.

According to the EIA, three vessels carrying a combined 11.5 Bcf of LNG left the Sabine Pass liquefaction facility during the week in review and one other tanker with an LNG-carrying capacity of 3.5 Bcf was loading on Feb. 21, though no departure occurred much of the report period as six vessels waited outside the Sabine Pass port for a loading window.

Cumulatively, LNG deliveries into Sabine Pass reached their highest level since the start of operations at 3.1 Bcf/d in December 2017, then averaged 0.5 Bcf/d lower month on month in January partly due to water supply issues at the plant that interrupted operations in the middle of the month. Pipeline natural gas feedstock deliveries to Sabine Pass from Feb. 1 to Feb. 20 averaged 2.8 Bcf/d.

Overall U.S. gas supply averaged at 83.8 Bcf/d during the week in review, compared to 83.9 Bcf/d in the previous week. Dry production held near unchanged as the average moved from 78.1 Bcf/d to 78.0 Bcf/d week on week, while net imports from Canada logged a 4% slump over the same period as it eased from 5.6 Bcf/d to 5.4 Bcf/d but ultimately had little effect on total supply.

In terms of inventories, the latest storage data from the EIA outlined a net 124-Bcf withdrawal during the week ended Feb. 16 that compared to a 92-Bcf year-ago pull and the 145-Bcf five-year-average draw. That left total working gas stocks at 1,760 Bcf, or 609 Bcf below the prior-year level and 412 Bcf below the five-year average of 2,172 Bcf.

Assuming net storage draws match the five-year average for the balance of the withdrawal season, the EIA sees total natural gas inventories reaching 1,290 Bcf on March 31, which is 24% lower than the five-year average and the second lowest end-of-season level reported since 2010. The record low end-of-season storage was 837 Bcf that occurred at the close of the 2013-14 heating season.