After last week’s hefty 237 Bcf withdrawal, this week’s slightly bearish 78 Bcf pull managed to fall short of all market expectations, last year’s 183 Bcf draw, and the five-year average of 160 Bcf for the same time period. The aftermath of the short-lived polar vortex has indicated that supply over the reporting week was affected by freeze-offs and maintenance, according to Natural Gas Intelligence. Demand also dropped at a faster rate, which can be seen as a key factor in the light withdrawal. Future weather patterns call for a few more cold shots to wrap up February, but futures are unlikely to see the same volatility that’s been exhibited during the winter. While unremarkable, this week’s withdrawal has brought inventories back within a somewhat more manageable position, but the deficit against the five-year average still holds some influence in the amplitude of price swings. Most estimates have the end of season volumes sitting around 1.2 Tcf to start injection season, so unless there is a major surprise on the way, working natural gas inventories could possibly close the gap we’ve seen over the past few months and reestablish some stability in the short term.
Working natural gas in storage currently stands at 1,882 Bcf, which is 30 Bcf (1.6%) lower than this time last year and 333 Bcf (15.0%) lower than the five-year average.
The March 2019 NYMEX Futures price began the day around $2.58/MMBtu prior to the report’s release, but has risen to $2.60/MMBtu after the report was posted.
Outlook for the Balance of Storage Season:
The graph below compares historical 12, 24 and 36 month strip prices and storage levels for the past 5 years.
The following table shows the injection numbers we will need to average by week to hit selected historical levels:
The following two graphs show current natural gas in storage compared to each of the last 5 years and weekly storage averages and patterns.
The graph below shows the injections through the current week over the past 5 years.
Finally, the graphics below depicts the 6 to 10 day temperature range outlook from the National Weather Service.
Current Week’s Outlook