Gas Prices Fall Below $2.80 Despite Bullish Storage Report

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Natural gas storage inventories increased by 51 Bcf for the week ended Oct. 13, per EIA. The injection was smaller than most market expectations of an injection in the low mid 50s.

Natural gas prices continue to trade on weather forecast variations and less on storage activity as the market already understand inventories will end near 3.8 Tcf.

The prompt month contract, Nov17 was trading lower this morning and losses were expanded following the EIA storage report. Contract is trading down $0.07 to $2.784 per MMBtu, at time of writing.

Working gas storage inventories increased to 3.646 Tcf, level 179 Bcf below last year and remain below the 5-year average by 35 Bcf.

See Drillinginfo EIA’s chart below. This graphic shows projections for end-of-season inventories as of Nov 1. With only two weeks left of the traditional injection season, inventory projections are only 20 Bcf apart between 3.79 Tcf and 3.77 Tcf.

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This Week In Fundamentals
The summary below is based on PointLogic’s flow data and DI analysis for the week ending 10/12.

• Supply: dry gas production rebounded this week, up 1.74 Bcf/d to 74.1 Bcf/d. The gains were related to Gulf of Mexico returning from Tropical Storm Nate disruptions. Canadian imports are down 200 MMcf/d.

• Demand: as expected in the shoulder season, power demand has started its decline while Rescom increases with heating load. Power demand is down 3.3 Bcf/d week-on-week, while Rescom increased by 1.9 Bcf/d. LNG exports were also up 200 MMcf/d reaching a record weekly average high of 3 Bcf/d.

• Total supply is up 1.5 Bcf/d while total demand is down 0.8 Bcf/d. The market is longer this week, therefore expect a larger injection in the 70-80s Bcf in next week’s EIA release.

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