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Gas Prices Remain Above $3 Due to Larger-Than-Average Withdrawals


Natural gas storage inventories decreased by 288 Bcf for the week ended Jan. 19, according to EIA. The draw was slightly above expectations. The February natural gas contract declined in price following the release, trading at $3.46 per MMBtu at time of writing, but the rest of the curve was more mixed, with March trading up to $3.13 per MMBtu at time of writing.

Today’s storage withdrawal compares with a 119 Bcf draw reported last year and the five-year average of 140 Bcf. Working gas storage inventories dropped to 2.296 Tcf, which is 519 Bcf below last year and 486 Bcf below the five-year average.

See the chart below for projections of 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 PointLogic’s flow data and DI analysis for the week ending Jan. 25, 2018.

  • Supply:

–  Dry gas production is up 1.7 Bcf/d week-on-week, with the Northeast (+0.7 Bcf/d), Southeast (+0.5 Bcf/d), Midcontinent (+0.2 Bcf/d), and Texas (+0.2 Bcf/d) all posting gains.

–  Canadian imports are down 0.9 Bcf/d, as temperatures moderated compared to the previous week.

  • Demand:

Demand is down week-on-week because of more moderate temperatures

–  Domestic natural gas demand is down 28 Bcf/d, with ResCom decreasing by 18.4 Bcf/d, power by 7.4 Bcf/d, and industrial by 2.2 Bcf/d.

–  LNG exports are down by 0.5 Bcf/d, while Mexican exports are up 0.1 Bcf/d.

Total supply is up 0.4 Bcf/d, and total demand is down 30.5 Bcf/d. A lower withdrawal, in the low-100’s Bcf range, is expected next week. This draw compares with an 87 Bcf withdrawal reported last year and a five-year average of 158.

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