Natural gas storage inventories increased by 2 Bcf for the week ended Dec. 2, per EIA. An injection in the middle of the winter caused gas futures prices to plummet following the EIA release. The Jan18 futures contract is down $0.13 to $2.79 per MMBtu, at time of writing.
In addition to today’s bearish storage report, uncertainty in weather forecasts continues to put downward pressure on prices. Following the cold front currently covering most of the US, weather expectations are calling for a return to more normal and even mild temperatures. The lack of demand while production has increased by almost 2 Bcf/d over the past month will continue to put a lid in gas price gains in the short term.
Working gas storage inventories increased to 3.695 Tcf, level 264 Bcf below last year and below the 5-year average by 36 Bcf.
See chart below for projections of end-of-season storage inventories as of April 1, the end of the withdrawal season.
This Week In Fundamentals
The summary below is based on PointLogic’s flow data and DI analysis for the week ending 12/07.
- Supply: dry gas production is down 0.5 Bcf/d week-on-week with losses shared in the Northeast, Texas and Gulf of Mexico. Lower production was offset by Canadian imports, which increased this week by 380 MMcf/d.
- Demand: winter like temperatures push demand higher this week including a jump in residential/commercial due to heating demand, up 5.6 Bcf/d week-on-week. Power demand increased by 2.2 Bcf/d, while industrial was basically flat. LNG and Mexico exports were down 0.08 Bcf/d and 0.31 Bcf/d week-on-week, respectively.
- Total supply is down slightly only by 100 MMcf/d to 81.8 Bcf/d. Total demand increased 8.2 Bcf/d to 89.5 Bcf/d. Market is significantly shorter this week, therefore expect withdrawals to come back in next week’s storage report.
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