DI Blog

Insights across the energy value chain

Natural gas storage inventories decreased 48 Bcf for the week ending December 21, according to the EIA’s weekly report. This week’s draw was spot on with market expectations, which were 48 Bcf. The East and Midwest regions led the draw, accounting for 39 Bcf of the 48 Bcf. All regions had a draw this week except the salts, which saw a build of 12 Bcf.

Working gas storage inventories now sit at 2.725 Tcf, which is 623 Bcf below last year and 647 Bcf below the five-year average.

At the time of this writing, the February 2019 contract was trading ~$0.174 lower than yesterday’s close of $3.372/MMBtu. Nearly all the price decrease came before the storage release.

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 December 28, 2018.

Supply:

  • Dry gas production increased 0.74 Bcf/d on the week. The South Central/Gulf (+0.29 Bcf/d), East (+0.26 Bcf/d), and Mountain (+0.19 Bcf/d) regions made up a majority of the increase.
  • Canadian imports increased 0.21 Bcf/d week-over-week.

Demand:

  • Domestic natural gas demand increased 0.07 Bcf/d week-over-week. Res/Com demand increased 2.59 Bcf/d, but was offset by a Power demand decline, which fell 2.62 Bcf/d. Industrial demand increased 0.05 Bcf/d.
  • LNG exports increased 0.84 Bcf/d, mainly due to shipments out of Corpus Christi (+0.48 Bcf/d) and Sabine Pass (+0.39 Bcf/d). Mexican exports decreased 0.46 Bcf/d week-over-week, mainly due to decreased exports on El Paso.

Total supply is up 0.94 Bcf/d and total demand increased 0.45 Bcf/d week-over-week. With the increase in supply outpacing the increase in demand, expect EIA to report a weaker draw next week. The ICE Financial Weekly Index report is currently expecting a draw of 43 Bcf for next week. Last year, the same week was a draw of 206 Bcf, while the five-year average is a draw of 119 Bcf.

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