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Gas Storage Posts 124 Bcf Withdrawal

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Natural gas storage inventories decreased by 124 Bcf for the week ending Feb. 16, according to the EIA’s weekly report. The draw was roughly in line with market expectations. Natural gas prices are slightly down from yesterday’s close with the March contract trading at $2.64 per MMBtu at the time of writing.

Today’s storage withdrawal is higher than last year’s draw of 89 but lower than the 5-year average of 160 Bcf. Working gas storage inventories dropped to 1.76 Tcf, which is 602 Bcf below last year and 412 Bcf below the 5-year average.

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 PointLogic’s flow data and DI analysis for the week ending Feb. 22, 2018.

  • Supply:
    • Dry gas production remains at 78 Bcf/d, showing no major week-on-week change. While Northeast (-0.2 Bcf/d) production declined, the losses were made up in Southeast (+0.1 Bcf/d) and Gulf of Mexico (+0.1 Bcf/d).
    • Canadian imports are up 0.1 Bcf/d week-on-week.
  • Demand:      Demand saw a week-on-week decrease due to less heating demand
    • Domestic natural gas demand is down 4.4 Bcf/d, with ResCom (-4.1 Bcf/d), and industrial (-0.6 Bcf/d) decreasing while power demand increased (+0.3 Bcf/d).
    • This is the second week in a row to see decreasing ResCom and industrial coupled with increasing power demand, and it is likely the result of low gas prices allowing gas generation to take market share from coal.
    • Mexico exports are down -0.1 Bcf/d while LNG exports are down 0.5 Bcf/d week-on-week. A storage tank leak was reported at Sabine Pass, although it should not have a major impact going forward.
  • Total supply is up 0.2 Bcf/d, and total demand is down 5.3 Bcf/d. A lower withdrawal is expected next week, below 100 Bcf. This draw compares with a 7 Bcf withdrawal reported last year and a 5-year average of 107.
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