According to the latest gas storage survey from S&P Global Commodity Insights, the Energy Information Administration (EIA) is expected to announce a withdrawal of just 1 billion cubic feet (Bcf) from US stocks for the week ending March 15. This forecast, based on a wide range of responses, indicates market expectations divided between withdrawals, injections, and no net change.
Consequences of surplus forecasts
If the 1 Bcf withdrawal forecast is confirmed, the US gas storage surplus would reach an all-time high of 670 Bcf, more than 40% above the five-year average. This would be the seventh consecutive bearish EIA report for US gas stocks.
Futures market reaction
At Henry Hub, the bearish outlook for American gas already seems to be priced in. In March, next-month futures averaged around $1.80/MMBtu, in line with February’s levels, when prices had reached historic lows.
Fundamental and climatic factors
EIA’s expected bearish inventory report adds to an early transition season into spring, bringing relatively mild weather across much of the US. This contributes to oversupply in the domestic gas market, with little change in gas market fundamentals in the week ending March 15.
Projections for the coming weeks
For the week ending March 22, S&P Global’s natural gas storage model predicts another bearish EIA report, with an expected injection of 8 Bcf. This projection contrasts with a five-year average withdrawal of 27 Bcf, underlining the trend towards an oversupplied market.
The U.S. natural gas market continues to face an oversupply by historical standards, despite a slight market contraction of 140-150 MMcf/day. While analysts expect continued bearish reports from the EIA, the sector is gearing up for a spring season marked by forecasts of mild temperatures and a largely oversupplied natural gas market.
