DI Blog

Insights across the energy value chain

Natural gas storage inventories increased by 46 Bcf for the week ending August 3, according to the EIA’s weekly report. This injection is roughly in-line with market expectations, which were an injection of 48 Bcf. The September 2018 contract was trading at $2.95 before the EIA report, similar to yesterday’s close of $2.95. Since then, prices are slightly down, with the September 2018 contract trading at $2.945 at the time of writing.

Working gas storage inventories now sit at 2.354 Tcf, which is 671 Bcf below last year and 572 Bcf below the 5-year average.

The two regions behind in inventory this season are the East and the Midwest. Last year for week ending July 28, 2017, the East had an inventory of 651 Bcf and the Midwest had an inventory of 754 Bcf. This year, both regions had inventory of 552 Bcf for week ending July 27, 2018. This lag for the two regions can mainly be attributed to the late start to the injection season. However, the East and Midwest are still capable of reaching a comfortable inventory level by the end of the injection season. With cooler weather in the forecast, we expect larger injections through the remainder of the injection season. With 14 weeks left in the injection season, see the table below for what the East and Midwest regions will have to do the remainder of the summer to end at last year’s levels for week ending October 27, 2017.

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 PointLogic’s flow data and DI analysis for the week ending August 9, 2018.

Supply:

  • Dry gas production is up 0.23 Bcf/d week-on-week, with total dry production at 81.39 Bcf/d. The Northeast and the Southeast (+0.12 Bcf/d) both climbed in production along with Texas (+0.10 Bcf/d), with small declines coming from the GoM and the Rockies (-0.06 Bcf/d).
  • Canadian imports are down 0.02 Bcf/d week-on-week, bringing Canadian Imports to 5.55 Bcf/d.

Demand:

  • Domestic natural gas demand increased 2.39 Bcf/d week-on-week, with the increase mainly due to increased power burn (+3.43 Bcf/d), and slightly offset by a decrease in ResCom (-0.96 Bcf/d). Total domestic demand increased to 65.10 Bcf/d for the week.
  • LNG exports were down 0.32 Bcf/d week-on-week while Mexican exports were up 0.02 Bcf/d.

Total supply is up 0.21 Bcf/d and total demand is up 2.34 Bcf/d week-over-week. With demand outpacing supply, expect EIA to report a lower injection next week. The ICE Financial Weekly Index report is currently expecting an injection of 28 Bcf for next week. Last year’s injection for the same week was 53 Bcf while the 5-year average is 55 Bcf.

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