Key Points: Bloomberg scrapes show us that gas field production was higher by almost 5.2 Bcf for the week. Average weekly demand fell in power generation, residential and commercial and industrial sectors by almost 0.97 Bcf/d. Canadian imports rose by 0.63 Bcf/d or 4.4 Bcf and Mexico exports also rose by 0.58 Bcf/d or 4.1 Bcf so overall the net effect on supply-demand equilibrium was minimal.
Our analysis leads us to expect the EIA to report later this week that there was a 76 Bcf withdrawal for the week ended Jan. 11 (much lower than the five-year average withdrawal of 218 Bcf, and comparable with the current 76 Bcf consensus whisper expectation.)
Supply - Negative
Average field supply remained robust this week as well. The weekly dry gas production rose by approximately 5 Bcf. There were no freezeoffs or delayed LNG import deliveries for the report week. Accordingly, supply will offer little negative pressure to this week's price activity.
Weather - Positive
Natural gas prices have surged forward since Monday in a biggest gain since November. There have been reports of cold weather that are expected to increase heating demand. Natural gas prices as of press time today are at $3.36/MMBtu. Spot intraday prices at the time of our report last week was at $2.74/MMBtu. Accordingly, weather will offer a positive pressure to this week's price activity.
Trader Sentiment - Positive
Natural gas futures prices for February have climbed up by almost 16% to $3.5/MMBtu. This is the sharpest increase since November 2018 when low inventory piles resulted in surge pricing in the market. The CFTC Jan 11 Commitment of Traders data is unavailable due to federal government shutdown. We believe that Trader Sentiment will be positive for this week's natural gas market.
Storage - Positive
We estimate a storage withdrawal of 76 Bcf will be reported by EIA this week for the week ended Jan. 11. Our 76 Bcf withdrawal expectation for this week is much higher than the five-year average value of 218 Bcf for the same week. Overall, we believe that higher withdrawal may be pushing the prices higher. All in, we see the storage changes as a positive driver for gas prices this week.
Demand - Negative
We see a slightly negative effect for structural demand side drivers this week. The demand for natural gas in power generation and industrial sector is showing the downward trend this week when compared to report week ended 01/11.
Flows - Neutral
Flows can be considered neutral this week as there were no upset conditions or freezeoffs. Flows will offer a neutral pressure for this week's price activity.