Natural gas storage inventories increased by 65 Bcf for the week ended Sept. 1, per EIA. The report came in above market expectations, which were in the high 50s to low 60s. The bearish report has the Oct contract (prompt) trading down $0.015 following the release at $2.985 per MMBtu, at time of writing.

Working gas storage inventories increased to 3.220 Tcf, level 212 Bcf below last year and 15 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 3.75 Tcf and 3.88 Tcf.

This Week In Fundamentals

The summary below is based on PointLogic’s flow data and DI analysis for the week ending 9/7.

Supply: dry gas production is up 1.4 Bcf/d this week as operations in the Gulf of Mexico and South Texas returned following Harvey. Production in the Gulf remains below levels seen before Harvey, but it’s expected to fully recover within the next week based on announcement from operators. In the Northeast, the start of Rover pipeline pushed production in the region up about 0.4 Bcf/d. Total supply is up 1.2 Bcf/d week-on-week due to a decline in imports from Canada of 0.2 Bcf/d.

Demand: fall-like temperatures and a holiday week has power demand averaging 28.9 Bcf/d this week, down another 0.5 Bcf/d week-on-week. Total demand is down 0.95 Bcf/d due to LNG exports being down 0.94 Bcf/d. Mexico exports are also returning following Harvey’s impact, up 0.29 Bcf/d to 4.2 Bcf/d.

• Total supply is up 1.2 Bcf/d while total demand is down 0.95 Bcf/d. Market remains long this week.

Storage: an injection larger than today’s 65 Bcf is expected to be released by EIA next week. A build of ~70 Bcf compares to a 62-Bcf in 2016. However, it is relatively in line with the 5-year average of 69 Bcf.

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Maria Sanchez