The withdrawal from US natural gas inventories likely doubled the five-year average during the week of the Thanksgiving holiday as pulls were measured in all regions except the Pacific.
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The US Energy Information Administration is expected to report a 59 Bcf withdrawal for the week-ended Nov. 26, according to a survey of analysts by S&P Global Platts. Responses to the survey ranged from a 48 to 80 Bcf withdrawal. The EIA plans to release its weekly storage report on Dec. 2 at 10:30 pm ET.
The winter 2021-22 heating season is off to a fairly slow start from a demand perspective, but storage is moving along at a standard pace. The South Central region has now joined the rest of the Eastern US in posting its expected first net withdrawal of the season. Inventory in the region is expected to fall by 16 Bcf, according to Platts Analytics' data. Last year the region added 13 Bcf during the same week.
The Pacific region stands apart as storage injections there are expected to not only have continued last week, but also accelerated. The week in progress shows more of the same trends unfolding with withdrawals accelerating slightly across the Eastern US while the Pacific has seen injection rates nearly double week over week. Temperatures the coming seven days are expected to remain warmer than normal in the US Southwest, weakening demand. This lost injection demand that had been balancing lower total demand could mean a significant downside risk to Southwest prices in the coming days.
A 59 Bcf withdrawal on the US level would nearly double the five-year average draw of 31 Bcf and dwarf the 4 Bcf pull reported during the corresponding week in 2020. It would reduce stocks to 3.564 Tcf. The deficit to the five-year average and 2020 would settle at 86 Bcf and 375 Bcf, respectively.
The NYMEX Henry Hub January contract shed 27 cents during the trade day on Nov. 30 to $4.58/MMBtu. The February and March contracts both slipped about cents. The Henry Hub average 12-month forward curve has declined by 30 cents/MMBtu to $4.14/MMBtu over the last month, lowering returns in the major dry gas basins.
Platts Analytics' supply and demand model expects a 53 Bcf withdrawal for the week ending Dec. 3, which is nearly in line with the five-year average withdrawal of 55 Bcf. The following week calls for a similar drawdown, which would measure well below the average pull of 114 Bcf as above-normal temperatures are expected across much of the US for the first full storage week of December.