US gas storage fields post largest draw of season as cold weather stays

US natural gas storage fields withdrew more than 200 Bcf for the second week in a row as a pair of 200-plus pulls look likely in the weeks ahead, as the Henry Hub prompt propels to a 14-year high with the largest daily jump for Henry Hub forwards on record.

Storage fields withdrew 219 Bcf for the week ended Jan. 21, according to data released by the US Energy Information Administration on Jan. 27.

It was stronger than the 214 Bcf draw expected by an S&P Global Platts survey of analysts. The drawdown also outpaced the five-year average of 161 Bcf and last year's 137 Bcf pull in the corresponding week. It proved to be the largest draw of the winter as it outweighed the 206 Bcf draw reported for the week prior

Working gas inventories decreased to 2.591 Tcf. US storage volumes now stand 308 Bcf, or 10.6%, less than the year-ago level of 2.899 Tcf and 25 Bcf, or 1%, less than the five-year average of 2.616 Tcf.

The EIA report marked the fourth consecutive week of increasing storage withdrawal activity. The draw of 215 Bcf last week was nearly seven times larger than the withdrawal reported during the final week of 2021. Fundamentals have changed dramatically from month to month when the market was eagerly awaiting a storage withdrawal of 100 Bcf or greater. The market is now looking at storage withdrawals rapidly approaching, but not likely to reach, the 300 Bcf mark, according to S&P Global Platts Analytics.

The NYMEX Henry Hub February contract catapulted nearly $2 to $6.26/MMBtu in trading following the release of the EIA's storage report on Jan. 27. The prompt month has not closed higher since November 2008. It was also the largest daily jump for Henry Hub forwards on record. Every forward month remains well above $4/MMBtu until April 2023 where it settled at $3.33/MMBtu.

Forecasts are calling for more below-normal temperatures and possible well freeze-offs extending into February, according to S&P Global Platts Analytics.

Platts Analytics calls for an even larger draw of 262 Bcf for the week ending Jan. 28 with another 200-plus pull likely for the week after.

Despite the massive draw expected for the week in progress, demand was down across the Lower 48 on Jan. 27. Supply and demand across all sectors saw downward movement Jan. 27, leaving total US demand down 12.2 Bcf/d on the day to 134.1 Bcf/d, and total US supply down 1.4 Bcf/d to 97.9 Bcf/d, according to Platts Analytics.

Residential and commercial demand dropped to 54.4 Bcf/d, accounting for 9.5 Bcf/d of the total decline due to warming temperatures across the nation. The biggest day-on-day losses came from the Midwest, down 5.4 Bcf/d to 17.1 Bcf/d, and the Northeast, down 3 Bcf/d to 18.8 Bcf/d. Gas-fired power generation dropped 2 Bcf/d to 31.3 Bcf/d with nearly half the decline coming from Texas.