A gauge reading taken an hour after shut-in is often still climbing. It is a point on a buildup, not this average. Pressure-transient analysis extrapolates the buildup to estimate the average. Material balance needs the same kind of pressure: one number that represents the tank, taken well to well on a consistent basis.
Flowing bottomhole pressure is lower by the drawdown. Using a flowing pressure in a material balance makes the reservoir look more depleted than it is. Using an early shut-in pressure makes it look less depleted.