US working natural gas volumes in underground storage declines 152 Bcf: EIA
Denver—US working natural gas stocks fell well below the five-year average last week, but within expectations, while Henry Hub futures fell following the announcement despite another above-average draw likely for the week in progress.
Storage inventories decreased 152 Bcf to 3.574 Tcf for the week-ended Dec. 18 the US Energy Information Administration reported the morning of Dec. 23. The report was issued one day early because of the Christmas holiday.The withdrawal was slightly below an S&P Global Platts' survey of analysts calling for a 154 Bcf pull. Responses to the survey ranged from pulls of 135 to 172 Bcf. The withdrawal was above the 146 Bcf draw reported during the same week last year as well as the five-year average withdrawal of 127 Bcf, according to EIA data.
Storage volumes now stand 278 Bcf, or 8.4%, above the year-ago level of 3.356 Tcf and 218 Bcf, or 6.5%, above the five-year average of 3.356 Tcf.
In the week ended Dec. 18, US natural gas production dropped to an average 89.8 Bcf/d, according to data S&P Global Platts Analytics compiled. That figure was down about 300 MMcf/d week on week, and more than 2 Bcf/d below a late-November high for US output at over 92 Bcf/d.
Recent supply-side weakness has been exacerbated by higher exports and strong domestic heating demand–factors that also contributed to last week's tighter supply balance and large storage withdrawal. In December, feedgas demand from US LNG export terminals is averaging its highest on record at over 11 Bcf/d as import prices in Northeast Asia push the $12/MMBtu level.
The NYMEX Henry Hub January contract plummeted 17 cents to $2.61/MMBtu in trading following the release of the weekly storage report at 10:30 am ET. The remaining winter strip, February and March, fell 15 cents to average $2.58/MMBtu, a decline of 5 cents from the week prior.
It currently forecasts a 134 Bcf withdrawal for the week ending Dec. 25, which would shrink the surplus versus the five-year average by an additional 32 Bcf, despite demand being slightly muted by the holiday week.
Milder weather has pushed residential and commercial demand down 1.3 Bcf/d. In addition, gas-fired burns in the power sector are on track to fall more than 2 Bcf/d week on week as much higher wind generation lowered gas generation. Warmer weather across the US resulted in lower heating load, and weaker draws in every region except for the East. Lower demand was met with a higher total US supply, led by an 800 MMcf/d boost in US production.