Week 13 of withdrawal season provided a fairly unremarkable and bearish pull of 173 Bcf, falling short of all market expectations but exceeding last year’s draw of 126 Bcf and the five-year average of 150 Bcf. Offsetting weather patterns (colder than normal in the Midwest and Northeast and warmer than normal in the West and Southeast) made for a somewhat more predictable withdrawal according to multiple market participants, but many are looking to next week to weigh the effects of the polar vortex that swept across the Midwest and Northeast earlier this week. Despite nearly record temperatures and wind chills across these regions, the NYMEX futures were mostly unaffected as opposed to the previous weather even in 2014. The market seems to already accounting for the above normal climate patterns that are expected after the extreme cold, and the March contract currently holding steady under $3/MMBtu in the $2.80/MMBtu range certainly is an indicator of this. While scarcity in storage isn’t necessarily in the cards, S&P Global Platts has noted that an end of February storage level of 1.2 Tcf would be sufficient to “justify scarcity concerns and a re-widening of the Nymex price risk premium.” Current technical support levels for NYMEX now sit at $2.771/MMBtu.
Working natural gas in storage currently stands at 2,197 Bcf, which is 14 Bcf (0.6%) lower than this time last year and 328 Bcf (13.0%) lower than the five-year average.
The March 2019 NYMEX Futures price began the day around $2.87/MMBtu prior to the report’s release, but has since fallen to $2.83/MMBtu after the report was posted.
Outlook for the Balance of Storage Season:
The graph below compares historical 12, 24 and 36 month strip prices and storage levels for the past 5 years.
The following table shows the injection numbers we will need to average by week to hit selected historical levels:
The following two graphs show current natural gas in storage compared to each of the last 5 years and weekly storage averages and patterns.
The graph below shows the injections through the current week over the past 5 years.
Finally, the graphics below depicts the 6 to 10 day temperature range outlook from the National Weather Service.
Current Week’s Outlook