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Gas Draw Beats Expectation, Prices Rally


Natural gas storage inventories decreased 177 Bcf for the week ending February 15, according to the EIA’s weekly report. This draw is above the market expectation, which was an inventory decrease of 170 Bcf.

Working gas storage inventories now sit at 1.705 Tcf, which is 73 Bcf below last year and 362 Bcf below the five-year average.

At the time of this writing, the March 2019 contract was trading at $2.698/MMBtu, $0.062 above yesterday’s close of $2.636/MMBtu.

Another price rally was brought to the natural gas market this week, with the March 2019 contract gaining traction in to the upper $2.60s. This rally was brought on by forecast changes to colder temperatures, just as most rallies have been during the second half of winter. With the winter season nearly over and the market having a good idea of the end of season storage inventory range, price rallies will be brief and limited and will continue to change as weather forecasts change. The market will likely be in a range market during the coming weeks, as it was in 2018 when it traded between $2.53 and $2.84/MMBtu between February and April.

See the chart below for projections of the end-of-season storage inventories as of April 1, the end of the withdrawal season.

This Week in Fundamentals

The summary below is based on Bloomberg’s flow data and DI analysis for the week ending February 21, 2019.


  • Dry gas production increased 0.42 Bcf/d on the week, mainly driven by production gains in the East (0.20 Bcf/d) and Mountain (0.12 Bcf/d) regions.
  • Canadian net imports were up 0.32 Bcf/d on the week.


  • Domestic natural gas demand increased 0.59 Bcf/d week over week. Outside the winter norm, Power demand led the increase, gaining 0.50 Bcf/d. Res/Com and Industrial demand also increased 0.02 Bcf/d and 0.06 Bcf/d, respectively.
  • LNG exports climbed 0.72 Bcf/d. Corpus Christi ramped exports back up this week after being down for commissioning procedures, which caused a majority of the increase. Mexican exports increased 0.03 Bcf/d on the week.

Total supply is up 0.75 Bcf/d, while total demand gained 1.38 Bcf/d week over week. With the gain in demand outpacing the gain in supply, expect the EIA to report a stronger draw next week. Last year, the same week saw a draw of 78 Bcf, while the five-year average is 89 Bcf.

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