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Power Burn Leads Demand Gains


Natural gas storage inventories increased by 78 Bcf for the week ended June 9, per EIA. The report is bullish with the build coming below market expectations, which were calling for an 86-Bcf increase in stocks. The full range of forecasts was between 77 Bcf and 94 Bcf.
The Henry Hub prompt contract (July 2017) have traded most of the week below the $3.00 mark after losing over 20 cents during the first 2 weeks of June. The July 2017 contract is up $0.07 following the EIA report and currently trading at $3.00 per MMBtu at time of writing.

Working gas storage inventories increased to 2.709 Tcf, level 322 Bcf below last year but 228 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 3.63 Tcf and 4.16 Tcf.

Power Burn Leads Demand Gains This Week

  • Supply: Northeast production declined early in the week after reaching record high levels over the weekend. The declines were caused by maintenance on Stagecoach, but most of the losses have now returned. Dry gas production remains above 71.5 Bcf/d this week, which is higher than May levels.
  • Demand: warmer-than-normal temperatures has power burn reaching 32 Bcf/d over the past 3 days, levels not seen since last summer. DI expects demand from the power sector to average ~29 Bcf/d in June.
  • Storage: weaker storage injections are expected over the next couple of weeks. However, weather is projected to turn cooler again in the 11-15-day forecast, which will bring storage injections back up by the end of June.
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