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US gas demand extends higher, supply holds steady in week to Dec. 21


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US gas demand extends higher, supply holds steady in week to Dec. 21

Colder weather kept U.S. natural gas demand elevated during the week ended Dec. 21, as supply remained flat amid reduced production and increased imports, the U.S. Energy Information Administration said in its latest "Natural Gas Weekly Update" released Dec. 22. The EIA reported that total U.S. natural gas consumption jumped from 92.6 Bcf/d in the previous week to 102.7 Bcf/d in the current review period to reflect an 11% gain week on week.

Power burn notched a 10% rise versus the week-ago level as it grew from 24.7 Bcf/d to 27.2 Bcf/d, while industrial-sector consumption logged a 3% uptick week on week as it climbed from 23.4 Bcf/d to 24.2 Bcf/d and residential/commercial-sector demand posted a 15% gain over the same period as it expanded from 44.5 Bcf/d to 51.3 Bcf/d. Exports to Mexico were up 9% week on week, from 3.5 Bcf/d to 3.8 Bcf/d.

Natural gas pipeline flows to the Sabine Pass liquefaction terminal during the week in review reportedly averaged 1.5 Bcf/d, or 14% higher than in the week prior. Four vessels with a combined LNG-carrying capacity of 14.7 Bcf left the terminal in the previous week, the EIA said.

Overall U.S. gas supply remained constant relative to the week-ago level as it averaged at 77.4 Bcf/d. Dry production logged a 1% decline week on week as it deflated from 71.3 Bcf/d to 70.4 Bcf/d, while net imports from Canada posted an 18% increase on the week as it rose from 5.6 Bcf/d to 6.7 Bcf/d.

In terms of inventories, the latest storage data from the EIA outlined a net 209-Bcf drawdown from stocks for the week to Dec. 16 that was largest December net withdrawal since record-keeping began in late 1994. It was well above both the 101-Bcf five-year average draw and a 33-Bcf pull seen in the corresponding week in 2015.

"The substantial storage draw is related to a combination of cold weather, increased electric-sector capacity for natural gas, reduced natural gas production relative to last year, and increased natural gas export volumes," the EIA said.

The reported withdrawal left total working gas stocks at 3,597 Bcf, or 226 Bcf below the year-ago level and 78 Bcf above the five-year average of 3,519 Bcf.

December gas demand exceeds historical norms

Total U.S. gas consumption during the first three weeks of December has averaged 92 Bcf/d, exceeding the prior-year level by 21% and the previous five-year average by 17%, according to the EIA.

Residential/commercial-sector demand that grew by 13 Bcf/d, or 45%, year on year, reportedly led the increase. Industrial-sector consumption accounted for a 1.6 Bcf/d, or 7%, increase versus the year-ago level, while power burn made up for a 1.1 Bcf/d, or 4%, gain over the same period.

Colder-than-normal weather, particularly in key demand regions of the Northeast and Midwest, drove most of the consumption gains in the residential sector, while increased heating demand for electric power likely helped boost power burn, the EIA said.

Heating demand started low in December but quickly rose as the month unfolded. Heating degree days across the contiguous U.S. were 2% below normal in the first week of December but rose to 11% above normal during the week ended Dec. 15 as arctic temperatures descended over large portions of the Lower 48.

"Low temperatures in key natural gas consuming areas—including the New England, Middle Atlantic, and East and West North Central U.S. Census divisions, where HDD were more than 10% greater than normal—were the primary driver behind the increased heating demand," the EIA said.

The average natural gas consumption was 80 Bcf/d during the first week of December, just up slightly from its previous five-year average, but was at 98 Bcf/d for the period of Dec. 8-21. Natural gas consumption surpassed the 100-Bcf/d threshold for the first time in the 2016/17 heating season on Dec. 15 as it reached an estimated 111 Bcf/d and has remained elevated at an average of 103 Bcf/d from Dec. 15-21, during which time it topped 100 Bcf for four days, even as triple-digit consumption days are generally rare in December, according to the EIA.