Natural Gas Futures Rally Loses Steam Despite Bullish EIA Storage Data; Huge Draw in Texas

The Energy Information Administration (EIA) reported another larger-than-expected withdrawal from natural gas storage inventories, this time a 217 Bcf pull that eclipsed NGI’s high-side estimate.

Nymex natural gas futures were trading about a nickel higher at around $2.450/MMBtu in the minutes leading up to the EIA report, then bounced another couple of cents as the 217 Bcf draw hit screens.

“Texans don’t like cold,” said a participant on Enelyst, an online energy chat. “Or ice,” said another.

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While most regions reported withdrawals that aligned with estimates ahead of the EIA report, the South Central region stunned analysts with a jaw-dropping net pull of 74 Bcf. The EIA said a massive 48 Bcf was withdrawn from nonsalt facilities, while 26 Bcf was taken out of salts.

Discussing the South Central withdrawal on Enelyst, participants noted that there were several factors that could have contributed to the steep withdrawal. In addition to the freezing conditions brought on by Winter Storm Mara, renewable energy took a hit. There were a couple of days of “nearly no solar,” according to an Enelyst participant. Some freeze-offs also led to a temporary decline in natural gas production, which likely led to a more significant pull on storage. Widespread power outages also resulted from the storm.

Ahead of the latest storage report, major surveys pointed to a total withdrawal of around 200 Bcf across the five EIA regions. A Reuters poll of 13 analysts had a range of expectations from 187 Bcf to 210 Bcf, with a median decrease of 194 Bcf. A Bloomberg survey of six analysts resulted in a median draw of 201 Bcf, and the Wall Street Journal’s poll of 14 analysts averaged a 199 Bcf withdrawal. NGI modeled a 212 Bcf withdrawal.

For comparison, 228 Bcf was pulled out of storage during the similar week last year, while the five-year average draw is 171 Bcf, according to EIA.

Outside of Texas, estimates were generally in line with actual withdrawals. The EIA said 67 Bcf was pulled out of Midwest stocks, and 49 Bcf was pulled from the East. Pacific inventories fell by 16 Bcf, while Mountain inventories slipped by 12 Bcf.

Total working gas in storage as of Feb. 3 stood at 2,366 Bcf, which is 233 Bcf higher than last year at this time and 117 Bcf above the five-year average, according to EIA.

Despite the bullish surprise in the latest data, futures couldn’t sustain the brief uptick brought on by the EIA report. By 11 a.m. ET, the March Nymex contract was trading at $2.417, up only 2.1 cents from Wednesday’s close.

“The macro view remains the same in my opinion,” said an Enelyst participant, noting expectations for historically lofty end-of-season inventories near 1.845 Tcf.