Gas Injection Meets Expectations, Power Demand Shows Summer Gains

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Natural gas storage inventories increased 98 Bcf for the week ending June 21, according to the EIA’s weekly report. This injection is near the expected injection, which was an injection of 97 Bcf.

Working gas storage inventories now sit at 2.301 Tcf, which is 236 Bcf above inventories at the same time last year and 171 Bcf below the five-year average.

At the time of writing, the July 2019 contract was trading at $2.299/MMBtu, roughly $0.031 higher than yesterday’s close.

Despite cooler weather this month compared to June 2018, power burn is up ~1.9 Bcf/d. June 2019 to date has accumulated 9,657 CDDs for the lower-48, compared to 10,571 CDDs for June 2018 for the same time frame. Also, during June 2019 so far, power burn has averaged 33.0 Bcf/d on 541.6 GW of gas power burn capacity, compared to 31.1 Bcf/d on 528.1 GW for the same period in June 2018. The higher power burn can mainly be attributed to the price of gas. Gas prices during June 2019 have averaged ~$2.33/MMBtu, where June 2018 to this date averaged ~$2.94/MMBtu.

Gas Injection Meets Expectations, Power Demand Shows Summer Gains

See the chart below for projections of the end-of-season storage inventories as of November 1, the end of the injection season.

Gas Injection Meets Expectations, Power Demand Shows Summer Gains

This Week in Fundamentals

The summary below is based on Bloomberg’s flow data and DI analysis for the week ending June 27, 2019.

Supply:

  • Dry gas production saw an increase of 0.09 Bcf/d. The small increase didn’t come with much excitement within the regions. The largest move came from the East (+0.16 Bcf/d), but was offset by declines in the Mountain region (-0.13 Bcf/d).
  • Canadian net imports increased 0.23 Bcf/d. This increase can be attributed to Alliance bringing their system back online and importing gas into the U.S.

Demand:

  • Domestic natural gas demand increased 2.39 Bcf/d week over week. Power demand accounted for nearly all of the domestic demand increase, gaining 2.33 Bcf/d on the week. Res/Com demand was relatively flat, and Industrial demand increased 0.07 Bcf/d.
  • LNG exports showed an increase of 0.34 Bcf/d on the week, while Mexican exports fell 0.28 Bcf/d.

Total supply is up 0.32 Bcf/d, while total demand increased 2.53 Bcf/d week over week. With the increase in demand outpacing the increase in supply, expect the EIA to report a weaker injection next week. The ICE Financial Weekly Index report is currently expecting an injection of 75 Bcf. Last year, the same week saw an injection of 78 Bcf; the five-year average is an injection of 73 Bcf.

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