Natural Gas Rises Slightly After EIA Reports Record-Setting -150 BCF Storage Withdrawal; Natural Gas Now Overvalued As Supply/Demand Balance Continues To Loosen; Natural Gas Inventories Likely To Bottom For The Season Today As Prolonged Period Of Warmth Arrives
6:00 AM EDT, Friday, March 24, 2017
In its weekly Natural Gas Storage Report, the EIA announced on Thursday that natural gas inventories declined by -150 BCF for the week of March 11-17. The withdrawal was 10 BCF larger than my -160 BCF projection. Nonetheless, the withdrawal was 129 BCF bullish versus the 5-year average and the largest for the March 11-17 timeframe in the full 22 year history of EIA data. The week's draw was driven by a -59 BCF withdrawal in the East region, 47 BCF bullish versus the 5-year average. On its own, this would have been the second largest nationwide withdrawal for the period in the last 5-years. While the East may have had the largest draw, the most bullish withdrawal was in the South Central Region whose -45 BCF draw was 49 BCF bullish versus the 5-year average of a +4 BCF weekly build. The Mountain Region likewise saw a very strong -51 BCF draw (5-year average -14 BCF) while the Mountain and Pacific Regions saw small neutral to bearish storage injections of +0 BCF and +5 BCF, respectively.
Despite the massive weekly withdrawal, signs once again pointed towards a loosening of supply/demand balance. With temperature eliminated as a variable, I calculate that supply/demand balance was 0.1 BCF/day loose versus the 5-year average last week, nearly unchanged from last week when the market was 0.15 BCF/day loose. This compares to the 1-month average of -1.2 BCF/day tight and late fall/early winter tightness that exceeded 4 BCF/day. Natural gas supply/demand balance remains 1.4 BCF/day tight year-over-year. It is possible that the market could tighten upsomewhat in coming weeks as a rapid rise in nuclear power outages should prompt additional natural gas substitution demand, which has been lagging dreadfully much of the year.
See more on my Current Natural Gas Inventories Page HERE.