Denver — US working gas volumes in storage fell by less than expected last week as prices continue to plummet and storage fields start to switch back to injections.
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Storage inventories fell by 19 Bcf to 1.986 Tcf for the week ended March 27, the US Energy Information Administration reported Thursday morning.
The pull was less than an S&P Global Platts' survey of analysts calling for a 25 Bcf withdrawal. The EIA reported a 6 Bcf injection during the corresponding week in 2019 while the five-year average comes to a draw of 19 Bcf.
Demand remained firm last week amid widespread closures of non-essential businesses and increased social distancing measures in response to the ongoing coronavirus pandemic.
Power burn, and residential and commercial demand saw localized declines in the southwestern US, but they were offset by LNG feedgasramping up week over week, according to S&P Global Platts Analytics. While the initial effects of coronavirus on supply and demand are mild so far, the risks to the already over-supplied gas market could linger well into the summer.
Even without high heating load, this week's withdrawal matched the five-year average as a result of the strong exports. LNG feedgas deliveries picked up 1.3 Bcf/d week over week, averaging the highest levels since February at 9.2 Bcf/d.
Storage volumes now stand 863 Bcf, or 77%, more than the year-ago level of 1.123 Tcf and 292 Bcf, or 17%, more than the five-year average of 1.694 Tcf.
The NYMEX Henry Hub April contract slipped 5 cents to $1.53/MMBtu in trading following the release of the weekly storage report.
The entire NYMEX Henry Hub balance of summer contract strip was trading lower Thursday. The market is gearing up for next week's likely start to the injection season. May through October have traded down 3 cents/MMBtu to an average $1.84, with the nearest $2 mark not showing up until October.
Still, there remain wide intra-seasonal spreads this summer, particularly as the cooling season begins in July, which is priced roughly 17 cents higher than the month before in June. Next winter is also priced lower at $2.58, nearly 75 cents higher than the summer, creating a strong economic incentive to inject.
Platts Analytics' supply and demand model currently expects a 20 Bcf addition to US storage volumes for the week ending April 3, marking the official switch to injection season, which typically runs through the end of October.
US-level heating degree days dropped 22% for the week in progress, cutting into residential and commercial demand across the board as storage fields gear up for injection season.