US working natural gas volumes in underground storage declines 192 Bcf: EIA

https://www.chemnet.com   Feb 05,2021 S&P Global

　　Denver—A string of massive weekly US natural gas storage withdrawals, starting with the 192 Bcf pull reported Feb. 4, have the potential to unravel recent forecasts, and prompt stocks to enter next year's heating season more than 600 Bcf below the five-year average, marking a dramatic year over year reversal.

　　Natural gas storage inventories fell 192 Bcf to 2.689 Tcf for the week ended Jan. 29, according to the US Energy Information Administration.The withdrawal was below the 195 Bcf pull an S&P Global Platts' survey of analysts expected, but it proved to be the largest weekly draw of the heating season. Storage volumes now stand 41 Bcf, or 1.5%, more than the year-ago level of 2.648 Tcf and 198 Bcf, or 7.9%, more than the five-year average of 2.491 Tcf.

　　The NYMEX Henry Hub March contract added 11 cents to $2.90/MMBtu in afternoon trading on Feb. 4. The upcoming summer strip, April through October, added 7 cents to average $2.93/MMBtu.

　　S&P Global Platts Analytics' supply and demand model currently forecasts a 181 Bcf withdrawal for the week ending Feb. 5, which would shrink the storage surplus to the five-year average by 56 Bcf. Milder temperatures reduced demand by nearly 2.5 Bcf/d. Unsurprisingly, residential and commercial demand paced the losses, averaging about 2.2 Bcf/d below the prior week. Moreover, gas-fired power generation fell about 600 MMcf/d as wind generation ramped up.

　　A draw of at least 230 Bcf looks probable for the week ending Feb. 12 as artic temperatures are forecast to blanket much of the country. It would measure nearly 100 Bcf stronger than the five-year average.

　　A recent cold snap in both the Midwest and Northeast regions has pulled hard on storage inventories. Heavy withdrawals are expected to continue with the 14-day weather forecast calling for US temperatures to average 2 degrees below normal.

　　While the main impact of the colder temperatures is being felt in the Northeast, prices across the Southeast and Texas have also strengthened considerably this week due to stronger Henry Hub prices, which rallied 19 cents on Feb. 1. The trickle-down impacts of the prolonged heavy withdrawals pushed the March Henry Hub contract higher as well, gaining 25 cents on Feb. 1.

　　Prior to the cold snap, Platts Analytics was forecasting total inventories to end the winter at 1.79 Tcf. However, with the recent pull, inventories could trend closer to 1.5 Tcf. This poses issues for the Summer 2021 build, which Platts Analytics is forecasting to total 1.6 Tcf over the season.

　　The projected lighter-than-normal injection season has the potential to send total US inventories into winter 2021-22 at 3.1 Tcf. This would be 600 Bcf less than the five-year average and 800 Bcf below volumes entering the 2020-21 heating season, likely leading to higher year-over-year prices at hubs located in the East, South Central and Midwest storage regions.

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