The US Energy Information Administration (EIA) on Thursday reported a withdrawal of 221 Bcf of natural gas from underground storage for the week ended December 30. The result, while massive by historical norms, fell short of expectations and left Nymex natural gas futures deep in negative territory.
Ahead of the government report at 10:30 a.m. ET, the February futures contract was down 33.8 cents at $3.834/MMBtu. The prompt month slipped to $3.755 when the EIA data was released.
By 11 a.m. ET, it had recovered somewhat but was still down 36.0 cents to $3.812.
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Prior to the report, withdrawal forecasts shared with Reuters ranged from 153 Bcf to 269 Bcf, with a median withdrawal of 237 Bcf. A Bloomberg poll landed a median pull of 240 Bcf. The Wall Street Journal survey found draw estimates of 156 Bcf to 265 Bcf and an average pull of 228 Bcf. NGI modeled a drop of 237 Bcf.
EIA recorded a fall of 46 Bcf in the same week a year earlier and a five year average of 98 Bcf.
The pullback for the period ended December 30 brought inventories down to 2,891 Bcf. This compares to last year’s level of 3,199 Bcf and the five-year average of 3,099 Bcf.
Analysts cited bitterly cold weather during the period covered that both fueled heating demand and halted production after the wellhead froze. However, parts of the country have already warmed up this week and milder weather is forecast for the next few weeks. Demand is expected to ease nationally and production has already recovered, so the bears will crush the futures markets.
“The depth of the freeze was almost as impressive as the speed at which volumes have picked up again,” said Houston-based Criterion Research analyst James Bevan of production on online energy platform Enelyst.
At a regional level, South Central reported a 96 Bcf decline, topping all others. This included a withdrawal of 53 Bcf from salts and a withdrawal of 43 Bcf from non-salt plants.
The Midwest and East followed with pulls of 60 Bcf and 56 Bcf, respectively, according to the EIA. Stocks in the mountain regions fell by 9 Bcf, while stocks in the Pacific were flat.
Looking ahead to next week’s EIA print, analysts are generally expecting a relatively modest pull, although estimates vary widely.
Early forecasts for the week ended January 6, provided to Reuters, ranged from withdrawals of 30 Bcf to 233 Bcf, with a median drop of 31 Bcf.
For the comparable week last year, EIA recorded a fall of 179 Bcf. The five-year average is 151 Bcf.
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