DI Blog

Insights across the energy value chain

Natural gas storage inventories increased 89 Bcf for the week ending June 28, according to the EIA’s weekly report. This is slightly above the expected injection, which was 85 Bcf.

Working gas storage inventories now sit at 2.390 Tcf, which is 249 Bcf above inventories at the same time last year and 152 Bcf below the five-year average.

At the time of writing, the August 2019 contract was trading at $2.272/MMBtu, roughly $0.032 higher than yesterday’s close.

Power demand has started to pick up speed as warmer temperatures have moved across the lower 48. This week, warmer temperatures are moving across the Midwest and the East and cover the US from north to south. This heat wave will provide a good test for power demand and give insight to where power demand could be in the future if temperatures hit the same level or higher. Further out, weather models show temperatures moderating in the central portion of the US, with heat continuing in the Southeast and Texas.

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 July 3, 2019.

SUPPLY:

  • Dry gas production saw an increase of 0.05 Bcf/d. The East region saw the largest gain, increasing by 0.25 Bcf/d, but this was offset by the South Central/Gulf region, which decreased 0.26 Bcf/d.
  • Canadian net imports increased 1.09 Bcf/d. This increase again is due to volumes ramping up on Alliance from the complete shutdown of the pipeline.

DEMAND:

  • Domestic natural gas demand increased 3.98 Bcf/d week over week. Power demand accounted for nearly all the domestic demand increase again this week, gaining 3.89 Bcf/d as temperatures started heating up. Res/Com demand increased slightly, gaining 0.14 Bcf/d, while Industrial demand fell 0.05 Bcf/d.
  • LNG exports showed an increase of 0.19 Bcf/d on the week, while Mexican exports fell 0.09 Bcf/d.

Total supply is up 1.14 Bcf/d, while total demand increased 4.19 Bcf/d week over week. With the increase in demand outpacing the increase in supply, expect the EIA to report a weaker injection next week. The ICE Financial Weekly Index report is currently expecting an injection of 63 Bcf. Last year, the same week saw an injection of 51 Bcf; the five-year average is an injection of 73 Bcf.

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