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US gas demand remains weak, supply flat in week to Jan. 25

Natural gas demand in the U.S. continued to decline during the week ended Jan. 25, as supply remained flat, the U.S. Energy Information Administration said in its latest "Natural Gas Weekly Update" released Jan. 26.

Overall U.S. gas consumption fell 8% week over week amid warmer weather, from 81.0 Bcf/d to 74.4 Bcf/d. It averaged at 100.3 Bcf/d during the corresponding week in the prior year.

Power burn logged a 2% slump versus the week-ago level as it faltered from 21.2 Bcf/d to 20.8 Bcf/d, while industrial-sector demand posted a 3% decrease over the same period as it eased from 22.5 Bcf/d to 22.0 Bcf/d. Residential/commercial-sector consumption notched a 15% drop week on week as it slid from 37.3 Bcf/d to 31.6 Bcf/d.

All nonexport demand was below the year-ago level, the EIA said. During the same week in 2016, power-sector consumption averaged 27.1 Bcf/d, while industrial-sector demand was at 23.6 Bcf/d, and residential/commercial-sector demand was at 49.6 Bcf/d.

Exports to Mexico during the report week averaged 4.0 Bcf/d, or up 4% from the prior-week figure of 3.8 Bcf/d and above the year-ago level of 2.9 Bcf/d.

Natural gas pipeline flows to the Sabine Pass liquefaction terminal during the week in review reportedly averaged 1.8 Bcf/d, indicating the ongoing commissioning of Train 3. Two vessels with a combined LNG-carrying capacity of 7.6 Bcf left the terminal in the previous week, while two other vessels with a combined LNG-carrying capacity of 7.4 Bcf were loading at the terminal as of the report's writing.

Total U.S. gas supply reportedly remained the same week on week as it averaged at 76.5 Bcf/d. Dry production was flat relative to the week-ago level at an average at 70.4 Bcf/d, while net imports from Canada posted a 1% decline over the same period as it tightened from 5.9 Bcf/d to 5.8 Bcf/d.

In terms of inventories, the latest storage data from the EIA outlined a net 119-Bcf withdrawal from stocks for the week to Jan. 20 that left total working gas in storage at 2,798 Bcf, or 348 Bcf below the year-ago level and 20 Bcf below the five-year average of 2,818 Bcf. It compared against a 176-Bcf five-year-average drawdown and the 202-Bcf pull seen in the corresponding week in 2016.

"Warmer-than-normal temperatures throughout most of the Lower 48 states mitigated heating demand for gas and contributed to the below-average withdrawals from storage," the EIA said.

Temperatures across the contiguous U.S. climbed 8 degrees from the week-ago level to average at 40 degrees Fahrenheit, which is 7 degrees higher than normal and 8 degrees higher than last year at this time. Heating degree days totaled 177, which compared with 229 in the year ago and a normal of 226.

Yet despite the significantly smaller-than-normal draw from stocks reported in the latest inventory data, the pace of storage erosion remains ahead of the average thus far in the 2016/2017 heating season compared with prior years. From the seasonal peak Nov. 8, 2016, through the recent storage review week ended Jan. 20, net inventory draws have totaled 1,236 Bcf, making it the second largest over the comparable period since 2010, when the five-region weekly working gas history started. The five-year average withdrawal over the same period is 1,058 Bcf.