The EIA announced a 10 Bcf injection for the week ended April 7. The full range of forecasts ahead of the release was between 1-17 Bcf injections, with most forecasts in the Mid 10s. The report is bullish since the injection came in smaller than expected resulting in forward prices gaining 2-3 cents following the EIA release. The prompt contract (May2017) is trading at $3.21 per MMBtu, at time of writing.
Working gas storage inventories increased to 2.061 Tcf. Inventories remain below last year and 5-year high levels by 416 Bcf. However, inventories are above the 5-year average by 263 Bcf.
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 3.5 Tcf and 4.2 Tcf.
Shoulder season is in full swing this week. Production remains weak near 70 Bcf/d and almost 4 Bcf/d lower than level seen at the same time last year. Demand is lower than last week on mild temperatures, while it transitions into warmer and cooling demand. Natural gas prices have been trading lower this week and prices are 10 cents below last Thursday. Due to lower demand and flat production, expect a larger injection in next week’s EIA report around 50 Bcf.
Drillinginfo continues to expect higher prices this summer, an increase from the current forward curve, to incentivize production growth in order to balance the market. Natural gas prices necessary for production growth in 2017 is an average of $3.50 per MMBtu.
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