Denver—Analysts expect US natural gas in storage volumes fell by about half the five-year average the week ended March 19, in what looks to possibly be the final net draw of the heating season with injections starting ahead of schedule, hampering the strength of the Henry Hub summer strip.
The US Energy Information Administration is expected to report a 21 Bcf withdrawal for the week ended March 19, according to a survey of analysts by S&P Global Platts. Responses to the survey ranged from a 7-30 Bcf pull.A 21 Bcf draw would be less than the 26 Bcf withdrawal reported in the corresponding week last year as well as the five-year average draw of 51 Bcf. It would be stronger though than the 11 Bcf decline reported by the EIA for the week prior.
Modestly colder temperatures and a ramp up in LNG feedgas tightened balances compared to the week prior. The largest change regionally came out of the Midwest, where sample storage activity flipped from a net injection of 2 Bcf during the prior week to a withdrawal of 5 Bcf this week, according to S&P Global Platts Analytics.
After a string of weak EIA storage reports, demand destruction from the arctic blast in February remains a key variable–largely impacting industrial consumption in the South Central. ERCOT power loads remain somewhat weak on a weather-adjusted basis, indicating industrial consumption is still below pre-freeze-off levels.
Outside of industrial, the majority of the other demand sectors were up modestly when compared to the prior week. Residential and commercial demand gained 900 MMcf/d as temperatures cooled across the northern US. In addition, softer wind generation, down 6 aGWs week over week, allowed gas-fired generation to grow 300 MMcf/d. LNG feedgas demand gained 600 MMcf/d, reaching more than 11 Bcf/d as netbacks remain very wide, driving strong utilization across the US fleet, according to Platts Analytics.
A withdrawal within expectations would decrease stocks to 1.761 Tcf. The deficit to the five-year average would decrease to 63 Bcf, and the deficit to 2020 would slip to 248 Bcf. The EIA plans to release its weekly storage report on March 25 at 10:30 am ET.
The NYMEX Henry Hub April contract dropped 6 cents to $2.52/MMBtu during March 23 trading. The summer strip slipped 5 cents to $2.63/MMBtu.
Looking ahead, it appears this report will be the final withdrawal of the winter 2020-21 as milder-than-normal temperatures are expected for the remainder of the shoulder season. Platts Analytics' supply and demand model expects a net addition of 13 Bcf for the week-ending March 26 which would start the injection season a week early.
