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Larger-than-Expected Gas Build Due to Inventory Reclassification


Natural gas storage inventories increased by 53 Bcf for the week ended Aug. 11, per EIA. The build included a revision downward of 10 Bcf in inventories due to resubmissions of natural gas in storage from working gas to base gas between June30-Aug4. The implied build for this week (without the reclassification) is 43 Bcf, which is in line with most market expectations. However, the 53 Bcf injection brought bearish sentiments initially to gas prices although the prompt month contract (Sept 2017) later started to trade up and currently at $2.911, up $0.02 cents at time of writing.

Working gas storage inventories increased to 3.082 Tcf, level 254 Bcf above last year and only 55 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 3.7 Tcf and 3.9 Tcf.

This Week In Fundamentals
The summary below is based on PointLogic’s flow data and DI analysis for the week ending 8/17.

• Supply: dry gas production is down 0.3 Bcf/d this week to 72.9 Bcf/d pushing total supply down by 0.4 Bcf/d as imports from Canada also declined (0.1 Bcf/d).

• Demand: warmer temperatures broght some power demand back this week increasing 0.9 Bcf/d week-on-week. Total demand is up 0.6 Bcf/d this week due to drops in industrial and Mexican exports.

• Storage: the natural gas market is shorter this week as demand gained while supply declined. An injection in the 30s Bcf is therefore expected to be released by EIA next week.

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