Current: 3,089 Bcf
Actual Injection/(Withdrawal): (131) Bcf
Economist Average Estimate: (121) Bcf
Previous: 3,220 Bcf
- The EIA reported a 131 Bcf storage draw, 6 Bcf above our 125 Bcf estimated draw and 12 Bcf above the 119 Bcf consensus draw.
- The East region showed a 65 Bcf draw, the Producing region showed a 33 Bcf draw and the West region showed a 33 Bcf draw. Storage stands at 3,089 Bcf, ~10% above last year and ~2% below the five-year average. The data suggests the market is ~1.5 Bcfpd oversupplied on a weather-normalized quarterly moving average basis. Notably, gas was up ~$0.03 following the storage report.
- Over the past four weeks, gas-fired power demand has been trending down ~1.3 Bcfpd y/y, while industrial demand has been averaging up ~0.1 Bcfpd y/y over the past month.
- Over the past month, Canadian net imports are down ~0.9 Bcfpd y/y, Mexican net exports are up ~0.5 Bcfpd y/y, and LNG send-out was down ~0.2 Bcfpd y/y.
- In ’15, we anticipate gas-fired power generation should increase approximately 0.8 Bcfpd driven by a regulatory-diminution in coal-fired power generation.
- Recent EIA U.S. supply data indicates October ’14 production averaged ~72.2 Bcfpd. We anticipate U.S. supply exits ’15 at ~73.7 Bcfpd. Rig activity is currently ~330 rigs and we expect an average of ~305 rigs in ’15.
UBS Investment Research
Storage withdrawal above expectations
Storage fell 131 Bcf, above consensus expectations of 120 Bcf and the UBSe range of a 120-130 Bcf withdrawal. However, this week’s withdrawal is still below both the 157 Bcf withdrawal in the comparable week last year and the 5-year average of a 150 Bcf withdrawal. Inventories decreased to 3,089 Bcf, widening the surplus vs. last year to 272 Bcf and narrowing the deficit vs. the 5-year average to 28 Bcf.
Weather last week was warmer than 2013 and the 5-year average
Last week’s weather was 4% and 1% warmer than the comparable week last year and the 5-year average, respectively. Since Sept, weather has been 10% and 4% warmer than last year and the 5-year average, respectively. Approximately 56% of HDDs remain ahead of us.
Forecast a 215-225 Bcf withdrawal next week
We forecast a 215-225 Bcf withdrawal next week, compared to 2013’s 287 Bcf withdrawal and the 5-year average of a 208 Bcf withdrawal. Over the last month, the weather-adjusted S/D has been 4.3 Bcfd oversupplied vs. last year and 3.3 Bcfd oversupplied vs. 5-year average. Given the current weather-adjusted oversupply, we forecast storage to exit the winter at 1.9 Tcf (above the 5-year average of 1.65 Tcf).
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