US natural gas stocks posted a sizable injection last week at a time when the Lower 48 traditionally switches to net draws, while the remaining NYMEX Henry Hub winter strip tumbled 18 cents following the report.
Storage inventories increased by 31 Bcf to 3.958 Tcf for the week ended Nov. 13, the US Energy Information Administration reported the morning of Nov. 19. The injection proved much more than an S&P Global Platts' survey of analysts calling for a 22 Bcf build. Responses to the survey ranged for an addition of 11 Bcf to 30 Bcf. The build was very bearish compared to the 66 Bcf draw reported during the same week last year as well as the five-year average withdrawal of 24 Bcf, according to EIA data. It also marked the second-consecutive week the EIA number surpassed market expectations.
US supply and demand balances were considerably looser, featuring demand losses of 4.0 Bcf/d week over week, according to S&P Global Platts Analytics. Weaker consumption was the result of very mild temperatures driving residential and commercial space heating down by 4.7 Bcf/d. The soft demand resulted in some temporary production curtailments in the Northeast, as cash prices traded below $1.00/MMBtu. Storage volumes now stand 293 Bcf, or 8%, more than the year-ago level of 3.665 Tcf and 231 Bcf, or 6.2%, more than the five-year average of 3.727 Tcf. The injection season has now extended one week further than usual.
The NYMEX Henry Hub December contract tumbled 14 cents to $2.574/MMBtu in trading following the release of the weekly storage report at 10:30 am ET. The remaining winter strip, January through March, lost 14 cents to average $2.67/MMBtu, a decline of more than 40 cents from one week prior. Natural gas prices saw immense selling pressure this week, with winter 2020-21 prices off more than 30% relative to its year-to-date high established late last month. The sizeable declines have been driven by very mild realized and expected temperatures, with weather models forecasting mild temperatures to persist into December, according to Platts Analytics. Further stoking bearish sentiment is production, which in recent days has eclipsed 90 Bcf/d for the first time since the spring. Higher output is largely the result of Northeast and Haynesville producers ramping up production ahead of the winter.
Platts Analytics' supply and demand model currently forecasts a 27 Bcf withdrawal for the week-ending Nov. 20, which would grow the surplus versus the five-year average by 10 Bcf as the heating season kicks off one week later than normal. Cooler, but still milder-than-normal temperatures, has boosted residential and commercial demand by 9.7 Bcf/d week over week. (November 20, 2020)
UNITED STATES - Natural Gas - Storage