Natural gas storage inventories decreased 166 Bcf for the week ending February 22, according to the EIA’s weekly report. This draw is below the market expectation, which was an inventory decrease of 175 Bcf.
Working gas storage inventories now sit at 1.539 Tcf, which is 154 Bcf below last year and 424 Bcf below the five-year average.
At the time of this writing, the April 2019 contract was trading at $2.809/MMBtu, $0.010 above yesterday’s close of $2.799/MMBtu.
Prices saw another rally this week, with the March 2019 contract jumping from $2.717/MMBtu last Friday to a close of $2.855/MMBtu on Tuesday this week. Similar to price change scenarios in prior weeks, this rally was brought on by forecast changes and a better idea of what weather will look like during March. Expect prices to continue to fluctuate with changes in the weather forecast, as they have for much of the second half of winter.
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 28, 2019.
- Dry gas production decreased 0.36 Bcf/d on the week, driven by losses in the South Central/Gulf (-0.36 Bcf/d) region.
- Canadian net imports were relatively flat week over week, increasing 0.01 Bcf/d on the week.
- Domestic natural gas demand decreased 4.60 Bcf/d week over week. Res/Com led the decrease, falling 2.83 Bcf/d week over week. Power and Industrial demand also fell 1.52 Bcf/d and 0.25 Bcf/d, respectively.
- LNG exports gained 0.38 Bcf/d with Sabine Pass accounting for the increase. Mexican exports increased 0.02 Bcf/d on the week.
Total supply is down 0.35 Bcf/d, while total demand fell 4.36 Bcf/d week over week. With the drop in demand outpacing the drop in supply, expect the EIA to report a weaker draw next week. The ICE Financial Weekly Index report is currently expecting a draw of 142 Bcf for next week. Last year, the same week saw a draw of 57 Bcf, while the five-year average is 106 Bcf.