US Natural Gas Storage Report - 4 Feb. 2021

US natural gas inventories decreased by 192 Bcf for the week ending January 29, compared with the five-year (2016–2020) average net withdrawal of 146 Bcf. Working gas stocks total 2,689 Bcf, which are 198 Bcf higher than the five-year average and -157 Bcf lower than last year at this time. Analysts’ expectations had been for a withdrawal of 196 Bcf. The weekly report came in a tad lower than expected but set a new seasonal high in storage withdrawals. Prior to the release of the report, the now prompt Mar21 NYMEX contract has been trading flat on the day. Today’s trade has spanned 20 cents with the contract settling at the top of the range.The overnight and mid-day weather outlooks are the primary reason behind the trading volatility. All outlooks indicate below to much below weather is looming for some major consuming region.

The unknowns are the extent of the cold and how far spreading will the cold reach. The only thing for certain as of now is that winter is finally here. Demand for gas from all sectors (especially heating demand from the ResCom sector) is hitting on all cylinders. It’s expected that the weekly withdrawals reported over the next few weeks will certainly exceed last year’s levels and the previous 5-year average. While storage levels will remain sufficient for the remainder of this heating season, more traders are taking note about injection concerns to replenish storage this summer and how that will impact working storage levels for winter 2021/2022 and the ability to refill storage in the summer of 2022. For end users that have exposure to the natural gas market for the next few years now is prime time to take advantage of some very attractive long-term value pricing thru cal23 or cal24.

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Andy Potts

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