Record February warmth brings unprecedented winter storage build

By Andy Huenefeld, Kinect Energy Group | March 09, 2017

In the latest of a long line of firsts experienced by the natural gas market in recent years, during the week ended Feb. 24, natural gas storage inventories increased by 7 Bcf. In the 23-year history of weekly government storage reports, inventories had never posted a net increase during the month of February. The implication is that heating requirements for the fuel was so low during that week that supply across the country was greater than demand by about 1 Bcf per day. For context, on average for that same week, 132 Bcf is withdrawn from natural gas storage, meaning that normally during that time of year, supply lags demand by about 19 Bcf per day.

This 20-Bcf-per-day looseness compared to the five-year average was driven by historically low usage by the residential and commercial sectors, with lackluster demand from industry and power generators also contributing. Indeed, gas-weighted heating degree days—the quantitative measure of how temperatures affect heating needs for natural gas—were at the lowest levels on record by far for that week, or any other week in February for that matter.

In early March, unseasonable warmth continues to keep a lid on market pricing, holding nearby NYMEX futures deliveries under $3 per MMBtu. Storage levels appear poised to go into the summer near or above 2 Tcf. While this still represents a deficit to the 2016 end-of-winter level, the natural gas market has at least temporarily avoided an overtly bullish storage situation.

Generally mild weather so far this winter has helped to mask otherwise bullish natural gas market fundamentals. At a time when production of the fuel is stagnant at best, the U.S. is teetering for the first time on record as being a net natural gas exporter. The combination of flat to falling production and rising exports will come to the forefront as the market emerges from the winter. As the traditional injection season ramps up in April, this could call into question the ability of the market to refill storage throughout the spring and summer.

Natural Gas Prices ($/MMBtu)


MAR 6, 2017

JAN 20, 2017

MAR 7, 2016





NNG Ventura




Calif. Citygate