The US Energy Information Administration is expected Thursday to estimate a withdrawal from natural gas storage of between 81 Bcf and 85 Bcf for the week that ended Friday, industry analysts said Wednesday.
A draw within those estimates would be smaller than both the 174-Bcf pull in the same week in 2010 and the five-year-average withdrawal of 148 Bcf.
As a result, both the 141-Bcf storage deficit to a year ago and the five-year-average deficit of 128 Bcf for the week that ended February 11 could shrink.
Analyst estimates for the week that ended Friday ranged from a withdrawal of 67 Bcf to 94 Bcf. EIA last week estimated a 233-Bcf withdrawal from storage for the week that ended February 11, cutting stocks to 1.911 Tcf.
"Market participants are looking ahead to what should be a rather uninspiring storage report on Thursday," Canaccord Genuity Energy Research analysts said Wednesday. "We anticipate a 90-Bcf withdrawal, well below last year's 172-Bcf withdrawal and the 148 Bcf five-year average."
The analysts said the market saw big declines in space heating, gas-fired power and industrial demand as heating degree days fell almost 30% week-on-week.
They also said the data should reflect the resumption of production that had been shut in by extremely cold weather. from the prior weeks' weather-related shut-ins.
"The storage pull should put an end to four straight weeks of significantly higher year-on-year withdrawals and should cut the year-on-year storage deficit by 80 Bcf or more," the analysts said.
Tim Evans, analyst at Citi Futures Perspective, said that while the below-average storage level should support prices above $4/MMBtu, still-high production levels are keeping many traders bearish.
Evans said he expects withdrawals will be below the five-year average level for the weeks ending February 24 and March 4, before moving to an above-average withdrawal for the week ending March 11.
"Under this storage scenario, the storage total as of March 11 would be 24 Bcf below the five-year average level for the date," he said. "We think that storage level would justify a price recovery toward $4.25[/MMBtu] or even $4.50[/MMBtu]. And in time, if the market fails to rebuild its former storage surplus, more gains could follow."
