The U.S. Energy Information Administration (EIA) on Thursday reported a paltry withdrawal of 98 Bcf from natural gas storage for the week ended Feb. 26. The result fell far short of the midpoint of analysts’ estimates, sending Nymex natural gas futures spiraling lower.
“It implies super weak supply/demand balances,” Bespoke Weather Services said.
Ahead of the EIA report, the April contract was down 5.1 cents at $2.765/MMBtu, and the prompt month dropped further to around $2.720 when the data was released. By 11 a.m. ET, the April contract had recovered some of the lost ground but remained down 6.7 cents from Wednesday’s close at $2.749.
Ahead of the EIA print, NGI’s model estimated a 135 Bcf withdrawal for the covered week.
A Bloomberg survey found withdrawal estimates ranging from 131 Bcf to 162 Bcf, with a median 140 Bcf decrease. A Reuters poll found pull estimates spanning from 93 Bcf to 150 Bcf and a median estimate for a 135 Bcf decline in stocks.
A Wall Street Journal poll, meanwhile, landed at an average withdrawal of 144 Bcf, with estimates ranging from decreases of 117 Bcf to 162 Bcf.
A week earlier, following the Arctic blast in Texas, EIA posted the steepest pull of the season and the second biggest on record — 338 Bcf. The record 359 Bcf draw was reported by EIA in January 2018.
Participants on The Desk’s online energy platform Enelyst were stunned by the low number for last week, given that chilly conditions lingered over much of the nation’s midsection and into the East during the period.
“Quite a low-side surprise,” one analyst said. Another added: “No way this is correct.”
The total tally, however, was skewed by light demand in the South Central region, where EIA reported an injection into salt facilities.
The region spurred the near-record withdrawal a week earlier amid the harsh cold snap that caught Texas off guard. But temperatures in Texas rebounded and, after gas prices soared amid the mid-February chill, Texans pulled back sharply on demand as weather improved, analysts said.
“It got pretty mild here in Texas very quickly after the freeze,” NGI’s Leticia Gonzales, price and markets editor, noted on Enelyst.
The pull for the Feb. 26 week decreased inventories to 1,845 Bcf, which compared with the year-earlier level of 2,122 Bcf and the five-year average of 2,203 Bcf.
The Midwest and East, where chilly weather lingered during the week, led all regions with withdrawals of 43 Bcf and 41 Bcf, respectively, according to EIA.
Pacific region inventories fell by 8 Bcf, while Mountain stocks declined by 6 Bcf.
The South Central, however, broke even, with a 9 Bcf pull from nonsalt facilities and an increase of 9 Bcf in salts.
Looking ahead to next week, analysts were unsure what to expect, given Thursday’s surprise. Liquefied natural gas export levels, hampered by the Texas freeze in February, this week climbed back to the lofty levels reached during the peak of winter. However, production also marched back to pre-storm levels as well.
“On the gas side of things,” Gonzales said, “it’s back to business as usual it seems.”
That, of course, leaves weather as the inevitable wildcard. Conditions so far this week have proven mixed, with some late winter conditions in parts of the country and early spring warmth in others.
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