Natural gas storage inventories increased by 91 Bcf for the week ending June 8, according to the EIA’s weekly report. This injection is slightly higher than market expectations, which were ~87 Bcf. Natural gas prices are trading slightly lower than yesterday’s close for July18 contract, trading at $2.95 per MMBtu, at time of writing. Before the EIA storage release, prices were trading higher than yesterday’s close by $0.03-$0.04. With the higher than expected injection, prices have since dropped.
Working gas storage inventories now sit at 2.00 Tcf, which is 757 Bcf below last year and 499 Bcf below the 5-year average. For the injection season this year to end at 3.79 Tcf, the same level as 2017, weekly injections this summer must average 85 Bcf. Last time average weekly injections averaged 85 Bcf was in 2014, where the injection season starting inventory was 824 Bcf and ended the season with 3.61 Tcf. However, since 2013, average weekly injections have averaged 74 Bcf. If injections average 74 Bcf/week for the remaining injection season, ending storage inventory will be ~3.56 Tcf.
See the chart below for projections of the end-of-season storage inventories as of November 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 June 21, 2018.
- Dry gas production is up 0.7 Bcf/d week-on-week. This change can mostly be attributed to the Rockies (+ 0.2 Bcf/d) bouncing back after a week of depressed supply due to processing plant outages, as well as strong production weeks in the Northeast and Southeast (both up 0.2 Bcf/d). Total supply is up 0.9 Bcf/d week-on-week, with most of that being explained by increases in dry gas production.
- Canadian imports are up 0.3 Bcf/d week-on-week.
- Domestic natural gas demand increased by 3.0 Bcf/d week-on-week. This increase is mainly due to an increase in power (3.4 Bcf/d). Due to the ramp up of warmer weather, power burn has increased for cooling purposes.
- LNG exports were flat week-on-week, and Mexican exports were down ~0.2 Bcf/d.
Total supply is up 0.9 Bcf/d and total demand is up 3.0 Bcf/d week-over-week. A weaker injection is expected next week. Last year’s injection for the same week was 46 Bcf while the 5-year average is 72 Bcf. With warmer temperatures in the forecast, production volumes and power demand will play significant roles for storage inventories in the coming weeks.
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