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Gas Prices Up Despite Larger-than-Expected Build

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Natural gas storage inventories increased by 91 Bcf for the week ended Sept. 8, per EIA. The report came in above most market expectations of an injection in the mid 80s.

Despite the larger than expected build in the storage report, the Oct contract (prompt) is trading higher following the EIA release, up $0.02 to $3.08 per MMBtu, at time of writing.

Larger-than-Average Injections Pushing Nov 1 Inventories Towards 3.9 Tcf

Working gas storage inventories increased to 3.311 Tcf, level 179 Bcf below last year and 43 Bcf above the 5-year average.
See Drillinginfo EIA’s chart below. This graphic shows projections for end-of-season inventories as of Nov 1. Two scenarios are included for summer injections (April-Oct) that result in inventories between 3.78 Tcf and 3.90 Tcf.

The past couple of weeks have seen larger-than-average builds resulting in an increase in the projected end-of-season inventories. Next week, another large injection is expected, pushing the expectations towards the high end of the range.

 

This Week In Fundamentals
The summary below is based on PointLogic’s flow data and DI analysis for the week ending 9/14.

Supply: total supply is down 0.13 Bcf/d week-on-week due to a decline in imports from Canada while dry gas production remained relatively flat.

Demand: total demand is down almost 1 Bcf/d caused by lower power burn, which decreased 2.6 Bcf/d. Declines in power burn were largely caused by losses in power from Florida due to hurricane Irma as well as mild temperatures in the rest of the U.S. LNG exports were up 1.9 Bcf/d and helped compensate some of the losses from power burn.

• Total supply is down 0.13 Bcf/d, total demand is down 0.98 Bcf/d. Market remains long this week.

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