The withdrawal was weaker than the 17 Bcf draw expected by an S&P Global Platts' survey of analysts. It was also less than the 15 Bcf draw reported during the same week last year as well as the five-year average withdrawal of 59 Bcf, according to EIA data.Strong injection activity in the South Central region's salt dome facilities drove the bearish draw. South Central region salt dome inventories began February right around the five-year average, but after reporting the largest draw in the EIA's historical data, the salts began to carve out a new five-year minimum.
The last two weeks have demonstrated how flexible the salt facilities are, with activity turning to a net injection of 12 Bcf for the week ended March 5, and another 21 Bcf build for the week ended March 12, according to EIA data.
The US averaged 3 degrees warmer than normal for the week ended March 12. Total demand dropped more than 6 Bcf/d, with residential and commercial falling by almost 5 Bcf/d, according to S&P Global Platts Analytics. Weaker weather-driven power loads and very strong wind output pushed gas burns down nearly 1.6 Bcf/d week over week too.
Storage volumes now stand 253 Bcf, or 12.4%, less than the year-ago level of 2.035 Tcf and 93 Bcf, or 5%, less than the five-year average of 1.875 Tcf.
The NYMEX Henry Hub April contract slipped 4 cents to $2.48/MMBtu in trading following the release of the weekly storage report, which represented a decline of 15 cents from the week prior.
Platts Analytics' supply and demand model currently forecasts a 32 Bcf withdrawal for the week ending March 19, which would measure 19 Bcf weaker than the five-year average, as the heating season enters its final weeks. Balances have tightened, with colder weather and stronger exports increasing the call on storage. Total demand has increased nearly 1.5 Bcf/d when compared to the prior week. Much of the gains were observed in LNG feedgas, which grew by 600 MMcf/d, as strong inflows into all the US facilities helped to push the weekly average north of 11 Bcf/d.
An early forecast for the week ending March 26 points to an 8 Bcf pull. The first net addition to storage typically occurs in the week ending April 2.
Ove the past five years, the injection season began with 1.8 Tcf in underground storage. If the current forecast for the next two storage weeks hold, the heating season will end with 1.742 Tcf in storage.
The lingering impact of refinery and petrochemical outages along the US Gulf Coast from the February cold blast have delayed the recovery of industrial gas demand, contributing to a lower end-of-winter stock draw, with March storage likely to finish about 200 Bcf above the Platts Analytics' base case forecast of 1.5 Tcf.
These bearish headwinds have pushed the Henry Hub summer strip down to $2.60/MMBtu from $3.00/MMBtu last month, with risk prices could fall below $2.50/MMBtu.
