Natural gas storage inventories increased 123 Bcf for the week ending April 26, according to the EIA’s weekly report. This injection is above the market expectation, which was an inventory increase of 118 Bcf.
Working gas storage inventories now sit at 1.462 Tcf, which is 128 Bcf above inventories at the same time last year and 316 Bcf below the five-year average.
At the time of this writing, the June 2019 contract was trading at $2.567/MMBtu, $0.053 below yesterday’s close of $2.620/MMBtu. The May 2019 contract rallied on expiration and closed at $2.566/MMBtu last week.
Another week, another record injection for the month of April. This injection tops the previous April injection record, set by the injections the prior two weeks, by 31 Bcf. These record injections helped inventories jump above last year’s and gain on the five-year average inventories.
Inventories are increasing, but weather is driving price volatility. Warm weather is driving Power demand higher in the Southern region, while cooler weather is driving Res/Com demand up in the East, Midwest, and Mountain regions. This increased demand took the June contract to $2.62/MMBtu for yesterday’s close. However, demand is expected to fall off and be below average throughout May. If that holds true, prices will stay well below $3/MMBtu, and larger-than-normal inventory builds will continue.
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 Bloomberg’s flow data and DI analysis for the week ending May 2, 2019.
- Dry gas production was relatively flat week over week, gaining 0.03 Bcf/d.
- Canadian net imports increased 0.11 Bcf/d on the week.
- Domestic natural gas demand increased 5.06 Bcf/d week over week. Res/Com demand showed the largest increase, gaining 3.16 Bcf/d. Power demand showed a gain of 1.75 Bcf/d, while Industrial demand gained 0.15 Bcf/d.
- LNG exports increased 0.20 Bcf/d week over week, while Mexican exports increased 0.28 Bcf/d.
Total supply is up 0.14 Bcf/d, while total demand decreased 5.68 Bcf/d week over week. With the gain in demand outpacing the gain in supply, expect the EIA to report a weaker injection next week. The ICE Financial Weekly Index report is currently expecting an injection of 93 Bcf. Last year, the same week saw an injection of 89 Bcf; the five-year average is an injection of 75 Bcf.