DI Blog

Insights across the energy value chain

Natural gas storage inventories increased 102 Bcf for the week ending June 7, according to the EIA’s weekly report. This injection is nearly spot on with the market expectation, which was an inventory increase of 101 Bcf.

Working gas storage inventories now sit at 2.088 Tcf, which is 189 Bcf above inventories at the same time last year and 230 Bcf below the five-year average.

At the time of writing, the July 2019 contract was trading at $2.350/MMBtu, dropping $0.035 from yesterday’s close. However, most of this decline came before the release of the storage report.

This week, the prompt month contract has traded in a narrow $0.049 range. The main driver of prices as we near peak summer will be weather. Should weather forecasts show significant heat, expect price gains. However, should the peak summer season be mild and inventories continue to gain on the five-year average, expect prices to fall.

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 June 13, 2019.

Supply:

  • Dry gas production increased 0.04 Bcf/d. The largest move was in the East region, which showed a 0.21 Bcf/d gain in production, while all other regions decreased less than 0.10 Bcf/d.
  • Canadian net imports decreased 0.29 Bcf/d.

Demand:

  • Domestic natural gas demand was flat week over week. Power demand fell 0.14 Bcf/d, while the offset came from Res/Com, which increased 0.17 Bcf/d. Industrial demand decreased slightly on the week, falling 0.04 Bcf/d.
  • LNG exports showed an increase of 0.03 Bcf/d on the week, while Mexican exports were relatively flat.

Total supply is down 0.25 Bcf/d, while total demand increased 0.04 Bcf/d week over week. With the increase in demand and the decrease in supply, expect the EIA to report a weaker injection next week. The ICE Financial Weekly Index report is currently expecting an injection of 99 Bcf. Last year, the same week saw an injection of 95 Bcf; the five-year average is an injection of 81 Bcf.

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