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US natural gas storage inventory appears on track to end withdrawal season early

The US natural gas storage withdrawal season looks to end earlier than usual as a forecast shows the week in progress likely features the final net draw of the heating season.

The US Energy Information Administration is expected to report a 70 Bcf withdrawal for the week-ended March 11, according to a survey of analysts by S&P Global Commodity Insights. Responses to the survey were wide, ranging from a 56 to 90 Bcf withdrawal. The EIA plans to release its weekly storage report on March 17.

A 70 Bcf withdrawal would be more than the five-year average draw of 65 Bcf and more than quadruple the 16 Bcf pull reported during the corresponding week in 2021. It would reduce stocks to 1.449 Tcf. The deficit to last year would increase to 335 Bcf. The deficit to the five-year average would climb to 295 Bcf.
A forecast by S&P Global Commodity Insights calls for a 59 Bcf draw for the week ending March 18, which would be in line with the five-year average. It will likely be the final net withdrawal of the heating season barring a dramatic change to the temperature outlook. The final net withdrawal from US inventories typically occurs for the week ending March 25.

The draw should prove much less than the week prior’s 124 Bcf pull. Last week’s 124 Bcf withdrawal was likely the final triple-digit inventory change of the winter 2021/22 heating season, as this week’s forthcoming inventory report is expected to show a dramatic decline in storage withdrawals across the US.

Most of the variance, uncertainty in the forecast, revolves around the South Central storage region, according to S&P Global Commodity Insights. Early on last week, sample flow data seemed to suggest inventories were on pace to show a net injection for the week. But as more data became available relating to weather, gas flows, and supply and demand fundamentals, the region managed to tilt back into net-withdrawal territory, with the forecast for the week reflecting a nominal reduction in inventories there.

Elsewhere, the East and Midwest regions continued to essentially mirror each other, with both forecast to see similar inventory declines last week. Out West, late-season cold weather kept heating demand elevated and, accordingly, inventories are expected to fall by 6 and 7 Bcf in the Mountain and Pacific regions, respectively.

The NYMEX Henry Hub April contract shed 5 cents to $4.62/MMBtu during trading on March 15. Henry Hub futures remain well above $4/MMBtu through the end of the winter 2022/23.
Source: Platts

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