Net withdrawals from storage have been at record levels since October 2013. In fact, during the period from Oct. '13 to today, natgas storage withdrawals have totaled 1,279 Bcf -- the highest level of such withdrawals since EIA started collecting data.
Meanwhile, pipeline imports from Canada into the Midwest fell off 40% and 37.5% into the Northeast. Net imports of pipeline natgas from Canada fell to their lowest level since the beginning of December 2013. This as exports to Mexico increased by 8.4% on the week.
Despite a marginal uptick in domestic production during the report week, inventories have fallen out of the bottom end of the five-year average. This is the first time this has happened since EIA began tracking the five-year average supply.
The 287 Bcf storage withdrawal was, however, lower than traders' expectations of 299 Bcf and limited price strength on the NYMEX, driving the deferred contract price 8 cents lower. However, the dismal storage levels, growing export demand from Mexico and a four dollar handle on futures should give producers incentive to increase natgas production in the short-term.
- Inventories stand at 2,530 Billion cubic feet (Bcf) -- 20.7% below year-ago and 14.9% below the five-year average.
- This week notes a record 287 Bcf net withdraw from storage -- 131 Bcf larger than the draw at the same time last year.
- Frigid temperatures, strong export sendouts and a general decrease in 2013 dry gas production limited injections to storage.
February '14 natural gas opened today at $4.37. $4.38 looks like strong resistance and despite eclipsing that mark on Wednesday and Thursday of this week, futures failed to violate that level today and Tuesday and have softened since. A violation of $4.38 would point bulls to $4.43 and $4.49 as stops along the way to the December '13 high at $4.57. Next support lies at $4.11 -- the top end of a 2 cent gap. Below that, bears will target $3.95 to signal a run to pivotal $3.91.
The average temperature in the continental United States during the report week was 25.9°F -- 7.4°F cooler than the same time last year and 9.6°F below the 30-year average temp.
The Henry Hub spot price rose 11 cents from $4.35 MMBtu to $4.44/MMbtu during the report week. Strong consumption amid frigid weather will limit downside action for natural gas prices in the coming week.
Gas consumption declined significantly as temperatures warmed. Total natural gas consumption for the report week declined by 30.6% below last week, to the lowest level in four weeks, as temperatures warmed following last week's cold snap. Residential/commercial sector and electric sector consumption decreased by 38.1% and 31.0%, respectively, as Lower 48 average daily temperatures reached 44°F, compared to last week's average of 29°Ft. Industrial sector consumption also declined by 8.7%, according to EIA.
Graph and indicated text provided by EIA.