Study calls for U.S. natural gas storage capacity to never exceed 300 Bcf

Key points

More than an average of five years will lead to a deficit

Prices pull back after polar vortex

New York –
The U.S. natural gas stock picked up a major pull last week, possibly far north of 300 Bcf, as the end-of-season storage outlook has changed dramatically in just two weeks.

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The U.S. Energy Information Administration is expected to report a 333 Bcf pullout for the weekend of Feb. 19, according to a study by analysts by S&P Global Platts. It would record as the second largest storage draw on record, and only record the second weekly draw ever above 300 Bcf.

Temperatures that were much colder than usual across the center of the country caused severe losses in production, severe demand cuts and very high cash prices. Such trends in daily supply and demand add some uncertainty in predicting this week’s EIA report as analysts ’predictions for the size of the pull were between almost 100 Bcf. Survey responses ranged from a 287 draw to a 360 Bcf draw.

U.S. gas production fell 9 Bcf / d compared to the previous week, according to data from S&P Global Platts Analytics. Most of the losses were observed within Texas, Oklahoma and the southeast. Such a large loss in U.S. production resulted in an overall increase of 2.6 Bcf / d in Canadian net imports and week-over-week LNG emissions.

As a result of lower production, large gains in spot natural gas prices, power losses and port closures, LNG feedgas and exports to Mexico fell by 5.1 and 1.3 Bcf / d, respectively, week over week.

Freezing temperatures affected industrial demand, with several refineries and petrochemical plants announcing closures or lower run-off rates during the week.

Despite the pair of gigantic weekly draws after the polar vortex, silver and futures gas prices have plummeted back to Earth, with Henry Hub ‘s NYMEX summer strip back below $ 3 / MMBtu.

Henry Hub March ‘s NYMEX March 7 cents fell to $ 2.88 / MMBtu at Tuesday trading, a decrease of more than 20 cents from the previous week.

The 333 Bcf pullback would be significantly stronger than the 145-Bcf pullback reported in the relevant week last year in addition to the five-year average pullback of 120 Bcf. A pullback within stock expectations would drop to 1.948 Tcf. The surplus to the five-year average would move to a deficit of 156 Bcf, and the deficit would expand to 2020 to 293 Bcf.

Platts Analytics ’supply and demand model expects a 150-Bcf pull for the week ending Feb. 26, which would still be nearly double the five-year average despite a week-over-week drip.

The largest weekly storage decline on record stands at 359 Bcf, set for the week ending January 5, 2018. During that week, a “bomb bike” tasted its way across U.S., promoting freezing and pipeline-related fractures in almost all U.S. basins, lowered supply by 3 Bcf / d.

The EIA plans to release their weekly storage report on February 25 at 10:30 am ET.