US gas storage stocks set for higher-than-average draw in final full week of 2020

Denver — US natural gas in storage likely fell by a margin much higher than the five-year average once again last week despite the Christmas holiday, which typically douses demand.

The US Energy Information Administration is expected to report a 123 Bcf withdrawal for the week ended Dec. 25, according to an S&P Global Platts survey of analysts.

Survey responses ranged from withdrawals of 107 Bcf to 135 Bcf. EIA plans to release its weekly storage report Thursday.

A 123-Bcf pull would be stronger than both the 87-Bcf withdrawal reported in the corresponding week last year and the five-year average draw of 102 Bcf. A withdrawal within those expectations would decrease stocks to 3.451 Tcf. The surplus to the five-year average would decline to 197 Bcf, and the overhang to 2019 would fall to 242 Bcf.

The draw, however, looks to be lower than the 152 Bcf pulled from storage the week prior.

Despite temperatures continuing to fall in the Northeast, warmer weather spread across the rest of the US lowered heating demand, reducing the call on storage week on week, according to S&P Global Platts Analytics. Milder weather, coupled with softened demand in the run-up to the holiday, reduced residential and commercial and power burn demand by a combined 3.3 Bcf/d week on week.

Balances also were supported by production gains in the South Central region, helping to push US production back above 90 Bcf/d for the week ended Dec. 25. Still, with more than 10 Bcf/d of LNG exports, forecasts for last week's draw anticipate a much higher pull than the five-year average.

Colder weather has tightened balances through the final week of 2020, but forecasts anticipate a warmer than normal first week of 2021, adding pressure to Henry Hub prices.

The NYMEX Henry Hub January contract jumped 15 cents to $2.46/MMBtu during trading on Tuesday afternoon. The remaining winter strip, February and March, rose to average $2.43/MMBtu, down 21 cents from the prior week.

Platts Analytics' supply-and-demand model expects a 162-Bcf draw for the week ending Jan. 1, which would decrease the surplus to the five-year average.

Temperatures across the country fell 3.1 degrees Dec. 29, with the Northeast leading the pack with temperature declines of 8.6 degrees. That increased Northeast demand by 3.8 Bcf/d day on day, driving total US demand to rise to 122.3 Bcf/d from 117.5 Bcf/d. The Midwest region demand also saw a notable uptick of 1.9 Bcf/d. US supply, however, declined 400 MMcf/d to 96.2 Bcf/d with losses spread across the country, except for the Midwest.