DI Blog

Insights across the energy value chain

Natural gas storage inventories increased by 24 Bcf for the week ending July 20, according to the EIA’s weekly report. This injection is close to market expectations, which were an injection of 25 Bcf. The August 2018 contract was trading at $2.771 before the EIA report, in-line with yesterday’s close of $2.775. Since then, prices are trading slightly higher, with the August 2018 contract trading at $2.791 at the time of writing.

Working gas storage inventories now sit at 2.273 Tcf, which is 705 Bcf below last year and 557 Bcf below the 5-year average.

As we are over half way through the injection season, the market is starting to get an idea of where the ending inventory may end up. The two factors that will impact how the rest of the storage year plays out are the weather and production. With weather forecasts expecting cooler temperatures and production continuing to grow, we expect larger storage injections for the remainder of the season. Below is a chart showing average injections for the current week through the end of injection season for years 2010 – 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 July 26, 2018.

Supply:

  • Dry gas production is up 0.60 Bcf/d week-on-week, with total dry production at 81.06 Bcf/d. The increase in production is mainly attributed to the Northeast (+0.28 Bcf/d) and the GoM (+0.34 Bcf/d).
  • Canadian imports are down 0.18 Bcf/d week-on-week.

Demand:

  • Domestic natural gas demand decreased by 0.88 Bcf/d week-on-week, with the decrease in power burn (-1.79 Bcf/d) and Res/Com (+0.68 Bcf/d) being the main factors in the change. Total domestic demand decreases to 64.24 Bcf/d for the week.
  • LNG exports were down 0.11 Bcf/d week-on-week while Mexican exports were up 0.03 Bcf/d.

Total supply is up 0.42 Bcf/d and total demand is down 1.05 Bcf/d week-over-week. With supply greater than demand, expect EIA to report a higher injection next week. The ICE Financial Weekly Index report is currently expecting an injection of 52 Bcf for next weeks report. Last year’s injection for the same week was 19 Bcf while the 5-year average is 40 Bcf.

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