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.
Prices --
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.
Consumption --
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.
