Thanksgiving arrives with first seasonal drawdown in natural gas
Daylight Savings, Thanksgiving, and the first snowflakes of the season are all harbingers of winter, and along with it, the first decline in nationwide natural gas stocks in the U.S. Energy Information Administration (EIA) natural gas storage report. An Arctic air mass descended from the interior of Canada to the northern tier states and Great Lakes, cooling the northeast over Thanksgiving weekend.
Overall, stocks declined by a nominal 21 billion cubic feet (bcf) across the country, with the largest declines in the East, Midwest, and Mountain regions. This first decline in months ends the seasonal build as the nation enters heating season. After this likely peak, we can expect stocks to gradually fall over through March or into early spring. Storage seems adequate to meet heating demands this winter, but much of that depends on potential polar vortex activity and low-temperature extremes.
Currently, stocks stand at 3,644 bcf, only 1.6 percent behind the five-year average and 8.1 percent below year-ago levels. Although lagging both those metrics, national storage has gained ground over the latter half of the season, and with warmer weather forecast over the next two weeks, we may close the gap further.
The larger unknowns are the state of economic recovery with news of the newly identified Omicron COVID-19 variant spreading around the world and its potential transmissibility, mortality rate, and resistance to vaccines. Many countries are reimplementing closures and travel bans, particularly from South Africa, where the new variant may have originated. Study of the new variant is underway to answer a host of concerns.
Meanwhile, global markets tanked on the Friday after Thanksgiving in response to fears over what may be a new wave of the pandemic. Oil prices corrected sharply lower, but natural gas futures remained well supported as stocks have yet to recover to pre-pandemic levels and winter heating demand will continue to grow.
Working gas in underground storage compared with five-year max & min
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