Natural gas storage inventories decreased by 63 Bcf for the week ending Mar. 23, according to the EIA’s weekly report. Natural gas prices are trading higher than yesterday’s close with the May contract trading up $0.05 to $2.75 per MMBtu at the time of writing. Prices increased early this week ahead of the April contract expiration, which settled at $2.69 on Tuesday.
Today’s storage withdrawal is higher than last year’s draw of 43 and the 5-year average of 48 Bcf. Working gas storage inventories dropped to 1.38 Tcf, which is 672 Bcf below last year and 346 Bcf below the 5-year average.
See the chart below for projections of the end-of-season storage inventories as of November 1, the end of the injection season. Note how projections based on historical injections are looking at a record low inventory level between 2.9 Tcf and 3.4 Tcf. The previous end-of-season low was set in 2014 at 3.57 Tcf when the winter 2013-14 Polar Vortex left inventories at record lows (0.8 Tcf) at the start of injection season. Drillinginfo expects end-of-season storage inventories to be 3.65 Tcf supported by strong dry gas production in the U.S.
This Week in Fundamentals
The summary below is based on PointLogic’s flow data and DI analysis for the week ending March. 29, 2018.
- Dry gas production is up 0.1 Bcf/d week-on-week, setting another weekly record pending any revisions. Year-to-date dry gas production averages approximately 7 Bcf/d more than the same time period last year. The largest year-on-year gains are in the Northeast (+3.5 Bcf/d), Southeast (+1.9 Bcf/d), and Texas (+1 Bcf/d) while the Gulf of Mexico (-0.8 Bcf/d) is the only declining region.
- Canadian imports are down 0.8 Bcf/d week-on-week as weather moderated. However, a slight uptick in LNG imports (+0.2 Bcf/d) offset some of the losses.
- Domestic natural gas demand is down 4.5 Bcf/d, with ResCom (-4.2 Bcf/d) and industrial (-0.4 Bcf/d) declining, while power was flat.
- LNG exports are up 0.3 Bcf/d as flows into the Cove Point terminal increased, surpassing 0.5 Bcf/d on Monday and averaging more than double the previous week’s flows. The terminal is likely preparing for its second shipment as ship tracking data shows an LNG tanker expected to arrive at Cove Point on April 9. Flows into Sabine Pass decreased slightly, offsetting some of the gains.
- Total supply is down 0.5 Bcf/d and total demand is down 4.7 Bcf/d. A lower withdrawal is expected next week. Last year saw an injection of 2 Bcf for the same week while the 5-year average is a 27 Bcf withdrawal.