We did not post yesterday's storage report, getting caught up in the equities - interest rates interplay instead. If interested here are the expectations going in from FX Empire and the report itself, from the EIA. With withdrawals of 338 Bcf gas in storage fell below the five year average for the first time since 2019. The fear at the moment is that with WTI prices over $60 the folks drilling for oil are going to bring up a lot of 'associated' gas. The usual CME futures chart is presented after the jump.
From the Energy Information Administration:
In the News:
Near-record cold temperatures drive near-record withdrawals from working natural gas stocks in the Lower 48 states
Working natural gas storage operators reported the second-largest weekly total net withdrawals ever reported for the Lower 48 states following a week characterized by widespread extreme cold throughout most of the country, which increased heating demand for natural gas. Net withdrawals from underground natural gas storage facilities totaled 338 billion cubic feet (Bcf) for the week ending February 19, 2021, exceeding the historical five-year average net withdrawals for the week by 218 Bcf (182%). Last week’s withdrawals were 21 Bcf lower than the all-time weekly record withdrawal of 359 Bcf, which was reported for the week ending January 5, 2018. As a result, working gas stocks fell to less than the five-year average by 161 Bcf.
Natural gas consumption in each of the main demand sectors increased during the report week, according to IHS Markit. Residential and commercial consumption averaged 62 billion cubic feet per day (Bcf/d) during the report week—the second-highest level in history after the record level of 64 Bcf/day reported for the week ending January 5, 2018. Electric power consumption of natural gas surpassed 33 Bcf/d, setting a new record winter high. In addition, industrial sector demand set a new record high of 28 Bcf/d.
Declines in production during the report week as a result of freeze-offs and shut-ins at natural gas wells in the Permian Basin also contributed to the increased withdrawals. Dry gas production in the Lower 48 states fell 12 Bcf/day to 77 Bcf/day for the week ending February 19, according to IHS Markit. Exports—both liquefied natural gas (LNG) and pipeline exports— declined 6.7 Bcf/day during the week, which lessened some of the need to withdraw natural gas from storage. Pipeline imports from Canada increased by 1.5 Bcf/day over the previous week to their highest levels since January 2010, which offset some of the declines in U.S. natural gas production.
Net withdrawals from natural gas storage facilities tend to be highly correlated with cold temperatures, which increase heating demand and, by extension, demand for natural gas. The first graph depicts this historical correlation between the weekly net change in working gas stocks and heating degree days (HDD)—a temperature-based measure of heating demand— during the heating season months (November 1–March 31) from January 2010 through last week.
Net changes in working gas stocks during the 2020–21 heating season (shown as red in the first graph) followed the general historical pattern, with higher HDDs generally leading to larger net withdrawals from working gas. During the first three months of the 2020–21 heating season weekly HDDs did not exceed 188 HDDs and the weekly net withdrawals also remained relatively small, with the largest weekly net withdrawal during this period totaling 187 Bcf. However, a period of sustained colder temperatures following the week ending January 28 resulted in a significant increase in HDDs and increased withdrawal activity. This increase peaked with the most recent report week, when significantly colder-than-normal temperatures resulted in 254 HDDs for the Lower 48 states—the third largest weekly total in history. Similarly, the largest weekly net withdrawals (359 Bcf) reported in the Lower 48 states coincided with the record-level 273 HDDs reported for the week ending January 5, 2018 (shown as green in the first graph).
The colder winter temperatures since late January prompted some of the largest natural gas storage withdrawal activity since the 2017–18 heating season. Total net withdrawals from underground natural gas storage facilities totaled 938 Bcf in the past four weeks (January 22—February 19). The cumulative withdrawals made up the third-largest four-week total reported since 2010, exceeded only by the record-setting 2013–14 and the 2017–18 heating seasons. In fact, two of the 15 largest weekly net withdrawals from storage occurred in the past two weeks.
The surplus to the five-year average natural gas inventory level has fallen in recent weeks because of higher natural gas storage withdrawals. The surplus to the five-year average last peaked at 244 Bcf on January 22. However, since then, net withdrawals have exceeded the five-year average. Working gas stocks are now 161 Bcf lower than the five-year average—the first deficit since December 2019....
....MUCH MORE
From the CME the last week's price action in 30 minute candles:
