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Natural Gas Market Overview: Dry Gas Production Continues To Decline, While The Weather Models Are Highly Unstable

January 17, 2020  

This report covers the week ending January 17, 2020.

Total Demand

We estimate that the aggregate demand for American natural gas (consumption + exports) totaled around 805 bcf for the week ending January 17 (down 2.3% w-o-w (week over week) and down 3.3% y-o-y (year over year)). The deviation from the norm turned negative - for the first time since January 11, 2019 (see the chart below).

This week, the weather conditions have warmed up slightly across the Lower-48 states. We estimate that the number of nationwide heating degree-days (HDDs) dropped by 1.5% w-o-w (from 159 to 157). However, total energy demand (measured in total degree-days - TDDs) should be some 16.8% below last year's level and as much as 20.0% below the norm.

Consumption-wise, Friday's 00z and 06z short-range weather models were rather bearish. Both GFS-ENS and ECMWF-ENS (00z runs) were bearish vs. yesterday's results. However, the latest model GFS-ENS 06z run showed some minor bullish changes vs. today's 00z run. In absolute terms, GFS models are "less bearish" than ECMWF models. The extended-range ECMWF model still projects above-normal TDDs in February.

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