Denver—US natural gas in storage likely plummeted by the largest volume of the season in the week ended Jan. 29 as a cold front increased the draw on stock significantly in the East and Midwest, pushing up regional prices in the process.
The US Energy Information Administration is expected to report a 195 Bcf withdrawal for the week ended Jan. 29, according to a survey of analysts by S&P Global Platts. Responses to the survey ranged from a 175 to a 208-Bcf withdrawal.A 195 Bcf pull would be much more than the 155 Bcf withdrawal reported in the corresponding week last year as well as the five-year average draw of 146 Bcf. A withdrawal within expectations would decrease stocks to 2.686 Tcf. The surplus to the five-year average would slide to 195 Bcf, and the overhang to 2020 would drop to only 38 Bcf.
A withdrawal within analysts' expectation would be 67 Bcf weaker than the draw reported the week prior. The increased call on storage was due to colder temperatures week over week–which translated into demand growth of roughly 11 Bcf/d over this period, according to S&P Global Platts Analytics.
Colder temperatures propelled US residential and commercial demand 8.3 Bcf/d higher week over week. Regionally, the largest demand gains were observed in the US Northeast and Midwest, with demand gaining roughly 7 Bcf/d week over week in those areas alone as temperatures dropped. Total US res-comm demand averaged 53.3 Bcf/d during the week ended Jan. 29, the highest yet of the current heating season.
Platts Analytics expects Northeast and Midwest storage fields to draw down by 125 Bcf week over week, an increase from the prior week which saw an aggregate withdrawal of 86 Bcf.
Northeast regional prices are averaging $5.35/MMBtu, led by Tennesse, Zone 6, delivered North and Algonquin, city-gates at $10/MMBtu and $8.11/MMBtu, respectively. Midwest prices are averaging $2.75/MMBtu in a tight spread, led by Dawn and Chicago city-gates at $2.79/MMBtu and $2.77/MMBtu, respectively.
The NYMEX Henry Hub March contract slipped 2 cents to $2.83/MMBtu during trading on Feb. 2. The prompt-month contract has increased by more than 40 cents over the past two weeks.
Platts Analytics' supply and demand model expects a 185-Bcf draw for the week-ending Feb. 5, which would shrink the storage surplus to the five-year average by an additional 60 Bcf.
Looking ahead, a draw north of 240 Bcf is on the table for the week ending Feb. 12–as arctic temperatures are forecast to blanket much of the country. Based on current weather forecasts, end-of-March storage has the potential to slip under 1.5 Tcf. If realized, it would place storage at a more than 500 Bcf year-over-year deficit entering the summer refill season.
The EIA plans to release its weekly storage report at 10:30 am ET on Feb. 4.
