The U.S. Energy Information Administration (EIA) on Thursday reported a withdrawal from storage of 154 Bcf of natural gas for the week ended Jan. 12, falling short of median estimates. Some analysts pointed to stronger wind generation as the difference.
Ahead of the 10:30 a.m. ET government report, February Nymex futures were trading down 7.2 cents from the prior day at $2.798/MMBtu. The prompt month shaved off another 3.0 to 4.0 cents after the data was released. By around 11 a.m. ET, futures were down 12.1 cents to $2.749.
Before the storage report was issued, NGI modeled a pull of 165 Bcf. The reported print was short of the estimate, but it easily surpassed the five-year average decrease of 126 Bcf and the year-earlier draw of 68 Bcf.
Estimates submitted to Reuters ranged from a draw of 140 Bcf to 182 Bcf, with a median of 162 Bcf. Bloomberg’s poll drew estimates from 144 Bcf to 188 Bcf, with a 165 Bcf median.
Weather over the report period was colder than normal in the western half of the United States and warmer than normal over the eastern half, NatGasWeather meteorologist Rhett Milne said. In addition, wind energy generation was “quite a bit stronger” than in the previous week, Milne said.
Strong wind generation may have reduced draws from South Central storage, participants on the online platform Enelyst said. EIA data showed the South Central region drew 32 Bcf from storage. That decrease all came from nonsalt facilities, as salts showed no change.
“Had salt and South Central generally been closer to consensus, the topline would be right at or slightly below market consensus,” said The Desk's John Sodergreen, editor-in-chief.
EIA’s print of a 140 Bcf withdrawal for the week ended Jan. 5 had outpaced analyst estimates for the sample period. Sodergreen noted the EIA’s history of offsetting market surprises in subsequent weeks as a possible factor to this week’s miss. Analysts at Mobius Risk Group also had flagged that possibility, which they said could lead to a sub-155 Bcf print.
Elsewhere, the Midwest and East led with draws of 51 Bcf and 42 Bcf, respectively, according to EIA. Mountain region stocks decreased by 12 Bcf, while Pacific inventories fell by 18 Bcf.
The draw for the latest week reduced inventories to 3,182 Bcf, a surplus of 320 Bcf, or 11%, to the five-year average of 2,862 Bcf. The level was also 12% above the year-earlier level of 2,832 Bcf.
For the storage report for the week ending Jan. 19, analysts said winter storm disruptions and higher heating demand could send the next withdrawal above 300 Bcf.
Early estimates submitted to Reuters ranged between withdrawals of 180 Bcf to 349 Bcf, with a median of 288 Bcf. That compares with a withdrawal of 86 Bcf a year earlier and a five-year average decrease of 148 Bcf.A third consecutive triple-digit print next week also could whittle the Lower 48 storage surplus to single digits and roughly balance the market heading toward the final stages of winter.
