Weekly Natural Gas Storage – 01/19/2017

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The EIA announced a 243 Bcf withdrawal for the week ended Jan. 13. The draw was higher than market expectations again this week, which average 230 Bcf with the full range of forecasts ahead of the release -147 to -253. The 253 Bcf draw is also significantly higher than historical draws for this week, a 175 Bcf draw was reported last year and the 5-year average is 170 Bcf.

The storage report is bullish as the draw was larger-than-expected and because price losses from yesterday and since opening this morning were reversed following the EIA report. The February contract is currently trading $0.02 cents higher at $3.32 per MMBtu, at time of writing.

Working gas storage inventories are now below the 3 Tcf mark at 2.917 Tcf, level 77 Bcf below the 5-year average and 431 Bcf below last year and 5-year high. See Drillinginfo EIA’s chart below.

Weekly Natural Gas Storage – 01/19/2017

Natural gas prices will be pressured over the next two weeks due to mild weather and while the longer-term forecast becomes clearer. Winter-like temperatures are expected to return in February, however models confidence is still low that far-off. The next two storage withdrawals are therefore projected to be significantly below historical levels.

From a fundamentals perspective, the supply and demand equation remains bullish with weak supply, growing demand and normal storage inventory levels. Drillinginfo continues to forecast a rise in prices with a $4+ average Henry Hub for 2017.

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