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Smaller-than-Expected Build Drives Gas Prices Higher

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Natural gas storage inventories increased by 28 Bcf for the week ended Aug. 4, per EIA. The build was below most market expectations which were in the mid-30s. Natural gas prices gained $0.04 cents yesterday and extended the gains following the EIA report. Prompt month contract (Sept 2017) is currently trading at $2.988, up $0.10 cents at time of writing.

Five-Year Average Gap in Inventories Eroding

Working gas storage inventories increased to 3.038 Tcf, level 275 Bcf above last year and only 67 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 3.68 Tcf and 3.95 Tcf.

This Week In Fundamentals
The summary below is based on PointLogic’s flow data and DI analysis for the week ending 8/10.

Supply: dry gas production averages 73 Bcf/d this week, up 100 MMcf/d from last week. Total supply is down 300 MMcf/d due to declines in imports from Canada.

Demand: colder-than-normal temperatures continue to keep a lid in demand. Total demand is down 0.6 Bcf/d this week.

Storage: an injection in the 40s Bcf is expected to be released by EIA next week due to persistent weak demand.

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