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Natural Gas Weekly: No Signs Of Annual Storage Surplus (So Far)

February 21, 2019  

This report covers the week ending February 22, 2019. Daily data for February 16 to February 21 is estimated. Daily data for February 22 is forecast.

Total Supply/Demand Balance

We estimate that aggregate demand for American natural gas (consumption + exports) will total around 881 bcf for the week ending February 22 (up 2.0% w-o-w and up 25.0% y-o-y). The deviation from the norm should remain positive and increase from +18% to +30% (see the chart below).

This week, the weather conditions have cooled down across the country - but particularly in the Central and Western part of the U.S. We estimate that the number of nation-wide heating degree-days (HDDs) increased by 5.0% w-o-w in the week ending February 22. At the same time, non-degree-day factors are spurring some extra consumption - particularly in the Electric Power sector. The most important four non-degree-day factors that we are looking at are: the spread between natural gas and coalwind speedshydro inflowsand nuclear outages. Specifically, lower ng/coal spreads are adding as much as 1.0 bcf/d of potential coal-to-gas-switching (compared to February 2018), while the level of hydro inflows is some 600 MMcf/d weaker compared to previous year. According to U.S. Nuclear Regulatory Commission, nuclear outages averaged 7,500 MW this week, mostly in line with historical average. Overall, total energy demand (measured in total degree-days) should be above last year's level by as much as 35%.

Total exports increased by 2.0% w-o-w (after surging by 25% last week) - primarily, due to stronger LNG sales.

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