The EIA announced a 53 Bcf withdrawal for the week ended March 10. Market expectations were looking at a 56 Bcf withdrawal, with the full range of forecasts ahead of the release between 47 and 72 Bcf. The report is bearish as the draw is slightly smaller than average market expectations and prices are trading 7 cents below yesterday with the prompt contract (April2017) at $2.913 per MMBtu, at time of writing.
Working gas storage inventories dropped to 2.242 Tcf and remain below last year and 5-year high levels by 236 Bcf. However, inventories remain above the 5-year average this week by 395 Bcf. See Drillinginfo EIA’s chart attached including projections for end-of-the-season inventories under 5-year average withdrawals and weak withdrawals for the remainder of the season.
This week demand for natural gas returned strong as arctic cold temperatures covered the East of the country. Total demand for the week averages over 100 Bcf/d per PointLogic estimates, level only seen in four other weeks this winter. The unseasonable cold for March has early storage estimates for next week’s EIA release at a withdrawal of over 150 Bcf, which compares to an injection of 13 Bcf during the same week last year.
With demand higher-than-normal so far this March, while natural gas production remains below 71 Bcf/d, storage inventories will likely end the season below the 2.1 Tcf mark. The April 1 historical inventories are 1.87 Tcf on the 5-year average and 2.5 Tcf is the 5-year max reached last year.
Drillinginfo continues to call for a rise in prices to facilitate additional investment in drilling activity since the current forward curve does not clear the expected demand for the remaining of 2017.