The Energy Information Administration (EIA) on Thursday reported a lighter-than-expected 44 Bcf weekly withdrawal from U.S. natural gas stocks, briefly prompting an already bearish futures market to probe even lower.
The 44 Bcf pull, recorded for the week ended Jan. 3, is much smaller than historical norms for this time of year. Last year, EIA recorded a 91 Bcf withdrawal for the week ended Jan. 4, 2019, and the five-year average according to NGI calculations is a 169 Bcf pull.
Still, the market managed to absorb the initial blow from the bearish miss. As the report crossed trading screens at 10:30 a.m. ET, the February Nymex contract dropped as low as $2.105/MMBtu before recovering to as high as $2.144 over the next 15 minutes.
By 11 a.m. ET, the front month was trading around $2.136, up 0.5 cents versus Wednesday’s settle and slightly higher than the pre-report trade around $2.128-2.138.
Prior to the report, the market had been looking for a print in the low 50s Bcf, with predictions ranging from minus 41 Bcf to minus 73 Bcf. A Reuters survey had pointed to a 53 Bcf withdrawal, while a Bloomberg survey had landed on a pull of 52 Bcf. NGI’s model had predicted a 51 Bcf withdrawal.
Bespoke Weather Services said it wasn’t reading too much into this week’s report given the impact of the New Year’s holiday and some “tail-event warmth” last week.
“We rarely read much into any holiday number, especially one with tail-event weather, and last week was super warm,” Bespoke said. “It may be that we simply underestimated holiday-related impact between Christmas and New Year’s Day. It may also be somewhat of a correction for the slightly bullish miss on last week’s report. Market is shrugging it off for now.”
Even after accounting for holiday impacts, the light withdrawal does keep the pressure on prices as the market enters what is typically the peak of the heating season.
“We just have ample supply and not enough demand and weather to sop it up,” Powerhouse President Elaine Levin said. “Winter is a time when, if we’re going to do it, we need to do it. And so far we’re not doing it.”
Total Lower 48 working gas in underground storage stood at 3,148 Bcf as of Jan. 3, 521 Bcf (19.8%) higher than last year and 74 Bcf (2.4%) above the five-year average, according to EIA.
By region, the Midwest posted the largest net withdrawal at 20 Bcf, followed by a 15 Bcf pull in the East. The Mountain and Pacific regions each withdrew 7 Bcf for the week. The South Central posted a net injection, with a 10 Bcf refill of salt stocks offsetting a 6 Bcf pull from nonsalt.