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US natural gas storage volume falls by 94 Bcf to 3.638 Tcf: EIA

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US natural gas storage volume falls by 94 Bcf to 3.638 Tcf: EIA

Highlights

Number nearly triples five-year average

Henry Hub futures static after large pull

Denver — US working natural gas volumes in underground storage dropped by 94 Bcf week on week, decreasing by nearly triple the five-year average and marking the first net withdrawal of the year. The NYMEX Henry Hub winter strip fell about 1 cent following the number's release as much smaller draws loom.

Storage inventories fell to 3.638 Tcf for the week ended November 15, US Energy Information Administration data showed Thursday morning.

The pull was more than an S&P Global Platts survey of analysts calling for a 91 Bcf draw. Survey responses ranged from a withdrawal of 78 Bcf to 102 Bcf.

The withdrawal was less than the 109 Bcf withdrawal reported during the corresponding week in 2018, but was much larger than the five-year average draw of 32 Bcf, according to EIA data. As a result, stocks were 506 Bcf, or 16%, more than the year-ago level of 3.132 Tcf and 60 Bcf, or 1.6%, more than the five-year average of 3.698 Tcf.

The massive draw was driven by temperatures falling about 10 degrees below normal across the eastern half of the US. This resulted in residential and commercial demand gaining 10.3 Bcf/d week over week, according to data from S&P Global Platts Analytics. Total supplies increased by 0.8 Bcf/d to average 97.3 Bcf/d. Production stayed steady, and the increase in supply was led by a nearly 1 Bcf/d increase in net Canadian imports into the Northeast US, where colder weather boosted demand by more than 6 Bcf/d, accounting for roughly half of the overall US demand growth.

Region Current Week Stocks Bcf Previous Week Stocks Bcf Net Change Year ago Bcf Year ago change % 5-year average Bcf 5-year average change %
East 909 932 -23 808 12.5 893 1.8
Midwest 1069 1106 -37 964 10.9 1076 -0.7
Mountain 205 207 -2 175 17.1 210 -2.4
Pacific 292 290 2 259 12.7 326 -10.4
South Central 1164 1197 -33 927 25.6 1193 -2.4
Total 3638 3732 -94 3132 16.2 3698 -1.6

The NYMEX Henry Hub December contract added 2 cents to $2.58/MMBtu following the announcement. The Henry Hub balance-of-winter contact strip traded roughly flat at $2.55, as the weekly storage report showed an inventory decline roughly in line with market expectations.

The strip has continued shedding gains racked up during the early-winter demand spike seen in early November, and so far, prices have fallen by about 30 cents from the recent high of $2.85 on November 5. In the last week alone, winter gas prices have fallen by about 10 cents as weather forecasts point to mostly normal weather through the next two weeks.

INFOGRAPHIC: Click here for full-size image

The early dose of winter demand seen last week has dissipated during the week in progress, with balances loosening by more than 9 Bcf/d on a large drop in demand, according to Platts Analytics. Total demand is down 10.3 Bcf/d to average 98.5 Bcf/d. Supplies are down 1 Bcf/d to average 96.3 Bcf/d. The drop in supplies stems from a decrease in net Canadian imports as flows from the Midcon Market into East Canada have moved nearly 0.8 Bcf/d higher on the week.

A forecast by S&P Global Platts Analytics' supply and demand model has storage volumes decreasing by a mere 21 Bcf for the week ending November 22.

-- Brandon Evans, bevans@spglobal.com

-- Eric Brooks, ebrooks@spglobal.com

-- Edited by Rocco Canonica, newsdesk@spglobal.com