Natural gas storage inventories increased 85 Bcf for the week ending May 3, according to the EIA’s weekly report. This injection was in line with market expectations, which were for an inventory increase of 86 Bcf.
Thus far in 2019, lower 48 dry natural gas production is ~7.1 Bcf/d higher than it was for the same period in 2018, while natural gas demand is up ~4.63 Bcf/d for the same period. Since injections started this season for the week ending March 29, total inventories have increased 355 Bcf. For the same time frame in 2018, storage showed a net draw of 40 Bcf.
Working gas storage inventories now sit at 1.547 Tcf, which is 128 Bcf above inventories at the same time last year and 303 Bcf below the five-year average.
At the time of this writing, the June 2019 contract was trading at $2.577/MMBtu, $0.033 below yesterday’s close of $2.610/MMBtu.
Natural gas demand rose last week, driven by cooler weather causing a Res/Com demand increase in the East, Midwest, and Mountain regions, while the South Central/Gulf saw warmer weather and increased power burn. However, demand has fallen off during the current week, and injections are expected to ramp back up to triple digits.
The production increases the market has endured year over year will help get inventories close to the five-year average by the end of injection season. Drillinginfo currently expects EOS inventories to fall between 3.6 Tcf and 3.7 Tcf. Should power burn be greater than the 10-year average, inventories are currently expected to land ~200 Bcf below the five-year average, which currently sits at ~3.68 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 Bloomberg’s flow data and DI analysis for the week ending May 9, 2019.
- Dry gas production was down week over week, losing 0.23 Bcf/d.
- Canadian net imports were unchanged.
- Domestic natural gas demand decreased 3.9 Bcf/d week over week. Res/Com demand showed the largest decrease, dropping 3.8 Bcf/d. Power demand showed a gain of 0.36 Bcf/d, while Industrial demand fell 0.40 Bcf/d.
- LNG exports increased 0.30 Bcf/d week over week, while Mexican exports increased 0.12 Bcf/d.
Total supply is down 0.26 Bcf/d, while total demand decreased 3.51 Bcf/d week over week. With demand decreasing significantly more than supply did for the week, expect the EIA to report a stronger injection next week. The ICE Financial Weekly Index report is currently expecting an injection of 105 Bcf. In 2018, the same week saw an injection of 106 Bcf; the five-year average is an injection of 89 Bcf.