What’s Affecting Gas Prices? (Week Of Dec. 11, 2018)

Bloomberg scrapes imply gas field production was nearly 0.11 billion cubic feet per day (Bcf/d) lower when compared to last week. Inflows from Canada and LNG grew by 0.37 Bcf/d and exports to Mexico sank a bit by 0.09 Bcf/d.
Our analysis leads us to expect the EIA to report later this week that there was a 91 Bcf withdrawal for the week ended Nov. 7 (3 Bcf more than the current 88 Bcf whisper consensus withdrawal expectation and 50% higher than the 63 Bcf five-year average withdrawal).
The hole in the storage levels that existed on Nov. 1 has only deepened after November’s above-normal withdrawals, and the expanding deficit looks likely to continue in December. We could see well-below normal ending levels of gas in working storage at or before the end of March 2019. That would not only put pressure of gas prices, but could also impact LNG exports in a detrimental way. Many projects were given the go-ahead by the U.S. Federal Energy Regulatory Commission (FERC) presuming plentiful supply. It is very early and too soon to begin projections, but the permits are written to allow FERC to suspend exports in some cases. More analysis will come in future weeks.