DI Blog

Insights across the energy value chain

Natural gas storage inventories increased by 92 Bcf for the week ending June 1, according to the EIA’s weekly report. This injection is roughly what the market was expecting. Natural gas prices are trading slightly higher than yesterday’s close with the July18 contract trading at $2.95 per MMBtu, at time of writing. This is ~$0.06 higher than previous day close.

Working gas storage inventories now sit at 1.82 Tcf, which is 799 Bcf below last year and 512 Bcf below the 5-year average. For the injection season this year to end at 3.79 Tcf, the same level as 2017, weekly injections this summer must continue to average 90 Bcf.

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 June 7, 2018.

Supply:

–        Dry gas production is down 0.6 Bcf/d week-on-week. This decrease can mostly be attributed the Rockies, where production decreased by 0.3 Bcf/d.

–        Canadian imports are down 0.9 Bcf/d week-on-week. Since the startup of Rover on June 1, the market has seen more Canadian exports, specifically on the Vector pipeline, where deliveries to Canada have increased ~0.5 Bcf/d.

Demand:

–        Domestic natural gas demand increased by 0.4 Bcf/d week-on-week. This increase is mainly due to an increase in Res/Com (1.6 Bcf/d) and a decrease in Power (-1.4 Bcf/d). This change is observed mainly due to weather in the Northeast and Mid-continent regions, where temperatures on average were in the mid to upper 60s, calling for more heating.

–        LNG exports increased ~0.1Bcf/d, and Mexican Exports are also up ~0.1 Bcf/d.

Total supply is down 1.5 Bcf/d and total demand is up 0.4 Bcf/d week-over-week. A weaker injection is expected next week. As warmer weather is quickly approaching, storage injections will be something to keep an eye on. Still needing average weekly injections of 90Bcf, weather will play a significant factor in if we are able to meet those injections. Last year’s injection for the same week was 78 Bcf while the 5-year average is 88 Bcf.

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