DI Blog

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Natural gas storage inventories decreased 134 Bcf for the week ending November 16, according to the EIA’s weekly report. This week’s draw is above market expectations, which were 119 Bcf. The East, Midwest, and South Central regions were the bulk of the draw, accounting for 119 Bcf of the 134 Bcf.

At the time of writing, the December 2018 contract was trading at $4.669/MMBtu, ~$0.146/MMBtu above the December 2018 close of $4.523 yesterday.

Working gas storage inventories now sit at 3.113 Tcf, which is 620 Bcf below last year and 710 Bcf below the five-year average.

The December 2018 contract has traded in a wide range in November, from $3.237/MMBtu to $4.837/MMBtu.
From November 1 through November 12, prices were trading under the $4/MMBtu mark. However, the trend since then has sent prices above $4/MMBtu, with prices trading in a range of $4.038/MMBtu to $4.837/MMBtu since November 13. With storage inventories at a record low and early winter cold temperatures, prices are likely to continue to bounce around for the remainder of the winter season.

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 November 21, 2018.

Supply:

  • Dry gas production decreased 0.05 Bcf/d on the week. The relatively flat total was brought about by offsetting positions in the Mountain region (+0.13 Bcf/d) and the South Central region (-0.16 Bcf/d).
  • Canadian imports increased 0.15 Bcf/d for the week.

Demand:

  • Domestic natural gas demand decreased 3.20 Bcf/d week-over-week. The big mover was Power demand, which decreased 2.24 Bcf/d. Res/Com and Industrial demand decreased 0.61 Bcf/d and 0.36 Bcf/d, respectively.
  • LNG exports increased 0.11 Bcf/d week-over-week, while Mexican exports decreased by 0.09 Bcf/d.

Total supply is up 0.11 Bcf/d, and total demand is down 3.30 Bcf/d week-over-week. With the increase in supply and the decrease in demand, expect the EIA to report a weaker draw next week. The ICE Financial Weekly Index report is currently expecting a draw of 65 Bcf for next week. Last year for the same week was a draw of 33 Bcf, while the five-year average is a draw of 34 Bcf.

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