US natural gas inventories decreased by 36 Bcf for the week ending March 19, compared with the five-year (2016–2020) average net withdrawal of 51 Bcf. Working gas stocks total 1,746 Bcf, which are 96 Bcf lower than the five-year average and 263 Bcf lower than last year at this time. Analysts’ expectations had been for a withdrawal of 31 Bcf. The market is up slightly in the prompt and near months likely due to a slightly higher than projected withdrawal and also the impending expiration of the April contract.
Estimates for the end of heating season “bottom” for storage now appear to be 1,7Tcf+, which looks considerably better than four weeks ago when models indicated that it would be 1.6 Tcf. As the weather is trending normal to only slightly above normal in major consuming areas, we should not expect significant changes to the end of season results. Soon, attention will change to how much gas we will be able to put into storage and early injection season results have the potential to move the market up or down. Buying opportunities in the balance of 2021 and 2022 could be affected if we have early heat and increased cooling demand early.
End users with exposure to natural gas prices for the next few years need to practice diligent and prudent risk management. With exceptional value currently seen in the deferred years, end-users need to be FORWARD thinking to manage their long-term risk exposure to the natural gas market.
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