Working natural gas storage has surpassed five-year average levels for the first time in more than a year, reports the Energy Information Administration (EIA). At 2,157 Bcf as of February 13, stocks are 58 Bcf greater than the five-year average.

EIA 5 Year Inventory

The last time inventories surpassed the five-year average was in November of 2013. Inventories ended the 2013-2014 winter withdrawal season last March at a 10-year record low of 837 Bcf.

Despite several near-record withdrawals early this heating season, overall withdrawals this season have been significantly lower than the record levels seen last year, and 16% lower than the five-year average. The EIA currently anticipates that inventories will end this injection season at 1,699 Bcf, 43 Bcf more than the five-year average, due to recent production growth and moderate demand.

The EIA forecasts that total natural gas consumption in the United States will average 88.1 Bcf/day for the remainder of the heating season, down 3% from 90.9 Bcf/day during the same period in 2014. Above-average temperatures experienced in the western half of the U.S. is expected to offset the consumption in other parts of the country, dampening overall natural gas consumption.

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Analyst Commentary

Raymond James Equity Research 02.20.2015
This week's withdrawal comes in line with consensus forecast; y/y storage surplus continues to grow.

This week's reported withdrawal of 111 Bcf was in line with consensus and above the Raymond James estimate. This withdrawal implies that we were 1.0 Bcf/d looser than last year, and we have averaged 1.7 Bcf/d looser over the past four weeks. Moving into next week, we expect a ramp up in withdrawals with colder weather. At the end of last winter, the fear was not being able to add enough storage in preparation for this winter. However, this is clearly no longer the case in 2015. With the amount of supply flooding the market, we believe there will be ample storage as we move into the injection season, setting us up for a significant storage glut. Thus, we reiterate our bearish stance on natural gas prices.  

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