First Draw of the Season Exceeds Expectations



Natural gas storage inventories decreased 94 Bcf for the week ending November 15, according to the EIA’s weekly report. This is higher than the market expectation, which was a draw of 87 Bcf.

Working gas storage inventories now sit at 3.638 Tcf, which is 506 Bcf above inventories from the same time last year and 60 Bcf below the five-year average.

Prior to the storage report release, the December 2019 contract was trading at $2.561/MMBtu, roughly $0.002 higher than yesterday’s close. At the time of writing, after release of the report, the December 2019 contract was trading at $2.550/MMBtu.

The first draw of the season has hit as below-average temperatures have arrived across the US. Last year for the same week, the market endured a draw of 134 Bcf and prices were trading near $4.50/MMBtu. However, storage inventories were significantly lower last year, causing concern for the rest of winter 2018-2019. With storage levels near the five-year average and production ~4.8 Bcf/d higher than last year, the market is trading between $2.50 and $2.75, significantly lower than it was last year. Weather forecasts will continue to be the main driver of prices and volatility. Currently, near-term weather forecasts show average to above-average temperatures, with below-average temperatures starting near the end of November and the beginning of December. However, given the current strong supply levels (storage inventories and production), temperatures will have to be significantly colder than average and long-lasting in order to produce a price run.

See the chart below for projections of the end-of-season storage inventories as of April 1, 2020, 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 November 21, 2019.


  • Dry production increased 0.16 Bcf/d on the week. Most of the increase came from the East (+0.25 Bcf/d), with an offset coming from the South Central (-0.13 Bcf/d) and the Pacific (-0.02 Bcf/d). The Mountain region and the Midwest saw small gains.
  • Canadian imports decreased 0.63 Bcf/d mainly due to decreased imports into the Midwest.


  • Domestic natural gas demand decreased 10.43 Bcf/d week over week. Res/Com demand accounted for most of the decrease, falling 7.22 Bcf/d. Power demand also decreased 2.31 Bcf/d, while Industrial demand decreased 0.90 Bcf/d.
  • LNG exports increased 0.40 Bcf/d mainly due to increase exports out of Cameron and Corpus Christi. Mexican exports decreased 0.09 Bcf/d.

Total supply decreased 0.46 Bcf/d, while total demand decreased 10.34 Bcf/d week over week. With the decrease in demand outpacing the decrease in supply, expect the EIA to report a weaker draw next week. The ICE Financial Weekly Index report is currently expecting a draw of 34 Bcf. Last year, the same week saw a draw of 59 Bcf; the five-year average is a draw of 46 Bcf.




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