The U.S. Energy Information Administration (EIA) on Thursday reported a withdrawal of 11 Bcf from natural gas storage for the week ended March 12. The result fell shy of analyst estimates and punctuated market concerns about weakened weather-driven demand.
“It was much warmer than normal over the northern and central U.S., while slightly cool over the West Coast and Southeast” during the report period, NatGasWeather said.
Ahead of the EIA report, futures were under heavy pressure, as they have been most of this month amid forecasts for warming temperatures and moderating heating demand. However, traders bought into the dip shortly after the storage result was released.
[Brighter Days Ahead: Listen in as Price & Markets Editor Leticia Gonzales looks forward at the North American natural gas market as it recovers from the historic freeze that crippled Texas on NGI’s Hub & Flow podcast.]
The April contract was down 9.0 cents at $2.438/MMBtu a few minutes before the 10:30 ET release of the storage report. The prompt month recovered modest ground to around $2.456 when the EIA data was released. By 11 a.m. ET, the April contract was down 3.9 cents day/day to $2.489.
Prior to the report, a Bloomberg survey found withdrawal estimates ranging from 14 Bcf to 20 Bcf and a median of 18 Bcf. The median forecast in a Reuters poll, meanwhile, landed at a pull of 16 Bcf, with draw estimates spanning 1 Bcf to 29 Bcf.
The Wall Street Journal’s weekly survey produced withdrawal estimates that ranged from 14 Bcf to 29 Bcf, with a 22 Bcf average decrease.
NGI estimated a 14 Bcf pull for the latest week. Last year, EIA recorded a 15 Bcf pull for the period, and the five-year average is a withdrawal of 59 Bcf.
Thursday’s report marked the third-consecutive result that was bearish relative to expectations.
EIA reported a withdrawal of 52 Bcf for the week ended March 5, short of expectations for a pull in the 70s Bcf. That followed a 98 Bcf withdrawal for the week ended Feb. 26 that compared with estimates for a draw in the 130s-140s Bcf.
The decrease during the March 12 week lowered inventories to 1,782 Bcf. That compared with the year-earlier level of 2,035 Bcf and the five-year average of 1,875 Bcf.
By region, the East and Midwest reported withdrawals of 22 Bcf and 14 Bcf, respectively, according to EIA. Pacific inventories fell by 6 Bcf. Mountain region stocks increased by 1 Bcf.
In the South Central, where temperatures were comfortable and heating demand faded, utilities injected gas into storage. They added 30 Bcf to stocks in the region, including an injection of 21 Bcf into salts and an addition of 10 Bcf into nonsalt facilities. EIA noted that totals may not equal the sum of components because of independent rounding.
Looking ahead to next week, analysts are generally expecting another modest pull from inventories, though some participants on The Desk’s online energy platform Enelyst said a shift is likely to follow.
“We see a draw for the week ending March 19. And after that, the inventory will start to build,” said analyst Xin Tang of Refinitiv.
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