Mild Weather and Production Recovery Expected to Drive Below-Average Withdrawal from US Natural Gas Inventories
Last week’s weather conditions and production rebound have led to expectations of a below-average withdrawal from US natural gas inventories. The first half of February experienced mild temperatures, thus limiting heating demand. Additionally, production has recovered from the weather-related losses seen in January. According to a Wall Street Journal survey of 10 analysts, brokers, and traders, natural gas in underground storage is estimated to have decreased by 66 billion cubic feet (Bcf) in the week ended February 16, reaching a total of 2,469 Bcf. This withdrawal would be smaller than the five-year average of 168 Bcf for the same week.
In the previous week, inventories experienced a surprisingly small 49-Bcf draw, leading to inventories being 15.9% above the five-year average for this time of year.
The estimated range in the survey for the upcoming withdrawal spans from 10 Bcf to 88 Bcf.
As a result of these expectations, natural gas for March delivery saw a 13% gain on Wednesday, reaching $1.780 per million British thermal units. This rebound follows a three-and-a-half-year low and was driven by a production company announcing plans to reduce production this year due to current market conditions.
The weekly storage report from the US Energy Information Administration is scheduled for release on Thursday at 10:30 a.m. EST.
Analyst comment
Positive news. Analyst forecast: Smaller than average withdrawal from natural gas inventories expected due to mild weather and production recovery. Natural gas prices increased by 13%.
