Natural gas storage inventories increased 98 Bcf for the week ending Sept. 28, according to the EIA’s weekly report. This week’s injection was the second highest of the season and was higher than market expectations, which were 93 Bcf. Before the EIA report was released this morning, the November 2018 contract was trading at $3.192/MMBtu, lower than the November ‘18 close yesterday of $3.230. After the EIA release and at the time of writing, the November ‘18 contract was trading at $3.171, roughly $0.021 lower than before the EIA release and $0.059 higher than yesterday’s close.
Working gas storage inventories now sit at 2.866 Tcf, which is 636 Bcf below last year and 607 Bcf below the 5-year average.
For the week of 9/24-9/28, October 2018 prices closed at $3.021/MMBtu, while November 2018 prices traded in a range from $2.980/MMBtu to $3.058/MMBtu. Prices started the week strong for the November ’18 contract, above $3/MMBtu, only to fall to the weekly low on Wednesday at $2.98. The storage report release last week sent prices back up on Thursday to $3.056, but they could not hold and fell back to $3.008 on Friday.
As another week of the injection season comes and goes, the market is left with the same storage question that has been present for some time now: Will there be enough inventory for the winter? Prices have increased drastically over the last week, with the November ‘18 contract trading at $3.171 at the time of writing, up nearly $0.12/MMBtu since this time last week. This price climb signals that the market has concern for the inventory levels and the different what-if weather scenarios winter can bring.
See the chart below for projections of the end-of-season storage inventories as of Nov. 1, the end of the injection season.
This Week in Fundamentals
The summary below is based on PointLogic’s flow data and DI analysis for the week ending October 4, 2018.
- Dry gas production decreased 0.505 Bcf/d, with total dry production averaging 84.04 Bcf/d. The primary decreasing region is the Northeast (-0.45 Bcf/d). There was also significant movement in the Rockies (-0.27 Bcf/d) and the Southeast (+0.30 Bcf/d).
- Canadian Imports are up 0.30 Bcf/d week-over-week, bringing Canadian Imports to 5.12 Bcf/d.
- Domestic natural gas demand increased 0.71 Bcf/d week-over-week. This increase can be attributed to an increase in power burn (+1.24 Bcf/d) with a slight offset in ResCom (-0.48 Bcf/d). Total domestic demand increased to 61.43 Bcf/d for the week.
- LNG exports were up 0.02 Bcf/d week-over-week, while Mexican Exports were also up 0.02 Bcf/d.
Total supply is down 0.21 Bcf/d, while total demand is up 0.78 Bcf/d week-over-week. With the decrease in supply and the increase in demand, expect EIA to report a weaker injection next week. The ICE Financial Weekly Index report is currently expecting an injection of 90 Bcf for next week. Last year’s injection for the same week was 87 Bcf, while the 5-year average is 92 Bcf.
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