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Prices Find Support on Strong Power Demand Following Bearish Storage Report


Natural gas storage inventories increased by 72 Bcf for the week ended June 30, per EIA. The report is bearish with the build coming above market expectations, which were calling for a 64-Bcf increase in stocks. The full range of forecasts was between 57 Bcf and 68 Bcf. Despite the larger than expected build, forward prices are trading slightly higher, up $0.01 to $2.90 per MMBtu for the prompt contract (Aug17) following the EIA report.

Working gas storage inventories increased to 2.888 Tcf, level 285 Bcf below last year but 187 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 3.6 Tcf and 4.1 Tcf.

Dry Gas Production Growing Again, Strong Power Burn

Supply: Us dry gas production averages 72.2 Bcf/d so far in July, up 0.5 Bcf/d from June levels. The growth is led by the Northeast and Haynesville. Canadian imports are also up this week 0.25 Bcf/d week-on-week due to higher demand in the US.

Demand: total demand increased by 1.5 Bcf/d last week due to higher power burn and LNG exports. Warm temperatures finally brought some power burn demand, which increased 3 Bcf/d week-on-week and reached 35 Bcf/d over the past 2 days. Res/Com demand dropped by 1.6 Bcf/d. Exports to MX dropped by 0.23 Bcf/d although remain above 4 Bcf/d. LNG exports increased 0.4 Bcf/d and are back to 2 Bcf/d levels as maintenance was completed.

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