US working natural gas in underground storage decreases by 58 Bcf: EIA

Denver — US natural gas in storage fell by less-than-expected levels last week as the NYMEX Henry Hub February contract dipped to its lowest price for this time of year since 1998.

Storage inventories fell 58 Bcf to 3.192 Tcf for the week ended December 27, the US Energy Information Administration reported Friday morning.

The pull was below an S&P Global Platts' survey of analysts, which called for a 67 Bcf draw. Responses ranged for a draw between 54 Bcf and 78 Bcf.

The pull was stronger than the 24 Bcf draw reported during the corresponding week in 2018, but below the five-year-average draw of 89 Bcf, according to EIA data. As a result, stocks were 484 Bcf, or 18%, above the year-ago level of 2.708 Tcf and 38 Bcf, or 1.2%, below the five-year average of 3.230 Tcf.

The draw was weaker than the 161 Bcf pulled from working gas in storage reported for the week ended December 20.

US supply and demand balances were looser compared with the week before on widespread demand declines over the holiday break, particularly in the Midwest. Total demand fell 12.9 Bcf/d week on week to an average 104.4 Bcf/d for the week ended December 27, according to S&P Global Platts Analytics.

In contrast to the large demand swings seen in the past few weeks, upstream supplies have been notably static, falling only 0.4 Bcf/d during the reference week, mostly from lower Canadian imports.

The NYMEX Henry Hub February contract remained flat at $2.125/MMBtu following the weekly storage report. The balance of winter NYMEX Henry Hub strip continues to reflect a market in oversupply, with February and March trading at $2.12/MMBtu and $2.10/MMBtu, respectively. The February contract has dropped by nearly 10 cents this week alone on a consensus, warmer-than-normal weather outlook.

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The February contract is at its lowest price at this time of the year since 1998. Even during the downturn of 2016 the contract at this time in January was trading around $2.30/MMBtu. But it closed at a monthly low of $2.09/MMBtu January 18, 2016.

A forecast by Platts Analytics' supply-and-demand model calls for a draw of 55 Bcf for the week ending January 3. If the forecast holds, the withdrawal would be less than one-third of the five-year-average pull of 184 Bcf.

Balances during the week ending January 3 have continued to widen, with supplies once again hardly moving at all while demand has moved lower, leaving markets 3.6 Bcf/d looser, according to Platts Analytics.

Total demand is averaging 100.9 Bcf/d this week, down 3.4 Bcf/d from a week earlier, this time with much of the decline driven by warmer weather and lower demand in the Northeast. Upstream, supplies are up just 0.1 Bcf/d to an average 96.3 Bcf/d.

-- Brandon Evans, bevans@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com