Natural gas storage inventories decreased 163 Bcf for the week ending January 18, according to the EIA’s weekly report. This draw is slightly above the market expectation, which was 160 Bcf.
Working gas storage inventories now sit at 2.370 Tcf, which is 33 Bcf above last year and 305 Bcf below the five-year average.
At the time of this writing, the February 2019 contract was trading at $3.120/MMBtu, or $0.140 higher than yesterday’s close of $2.980/MMBtu.
Natural gas storage inventories have climbed back to last year’s levels. This looked like a tall order through the early part of winter, when the deficit was greater than 700 Bcf. However, with the above-average temperatures through the last half of December and the first part of January, draws were well below average and inventory was able to recover. Should weather produce a substantial and sustained cold shot, there may be a greater concern for inventories. Without that cold shot, the concern for end-of-season inventories will be low.
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 January 24, 2019.
- Dry gas production decreased 1.34 Bcf/d on the week. The decrease mainly came from the East region, which decreased 0.99 Bcf/d, mainly driven by decreases in Pennsylvania and Ohio. With the pipeline explosion, TETCO was the biggest driver of the supply decreases for both states, along with Transco for Pennsylvania.
- Canadian imports were relatively flat week-over-week.
- Domestic natural gas demand increased 3.27 Bcf/d week-over-week. Res/Com demand increased 3.43 Bcf/d, with most of the demand coming from the Midwest. Power demand saw a decrease of 0.50 Bcf/d on the week, while Industrial demand increased 0.34 Bcf/d.
- LNG exports decreased 0.87 Bcf/d this week, driven by Corpus Christi LNG reducing volumes from over 0.70 Bcf/d last week to essentially zero this week. Mexican exports increased 0.13 Bcf/d on the week.
Total supply is down 1.34 Bcf/d, and total demand increased 2.54 Bcf/d week-over-week. With the increase in demand and the decrease in supply, expect the EIA to report a stronger draw next week. The ICE Financial Weekly Index report is currently expecting a draw of 200 Bcf for next week. Last year, the same week saw a draw of 99 Bcf, while the five-year average is a draw of 139 Bcf.
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