Withdrawals from storage in the Pacific and South Central regions contributed to another underwhelming injection this week, as the EIA reported a build of 35 Bcf that once again came up short of the market expectation, which came in around 45 Bcf. Last year’s build of 18 Bcf was blown out of the water, but the five-year average of 42 Bcf for this same period corroborates the narrative of a currently undersupplied storage picture. That being said, this past Tuesday
saw the United States’ dry gas production hit a record level of 81.9 Bcf/d, which could hopefully help narrow the deficit we are seeing in storage against the five-year values. With August slated to maintain warmer-than-average temperatures across the Midcontinent and Northeast, these records could be offset yet again and the market may continue to trade sideways as we’ve seen over the past few weeks. The end of August has the potential for more favorable injections as a forecasted El Nino-like pattern should arrive, bringing along more sustainable and cooler weather patterns.
Working natural gas in storage currently stands at 2,308 Bcf, which is 688 Bcf (23.0%) lower than this time last year and 565 Bcf (19.7%) lower than the five year average.
The September 2018 NYMEX Futures price began the day around $2.75/MMBtu prior to the report’s release, but has since elevated to $2.82/MMBtu after the report was posted.
Outlook for the Balance of Storage Season:
The graph below compares historical 12, 24 and 36 month strip prices and storage levels for the past 5 years.
The following table shows the injection numbers we will need to average by week to hit selected historical levels:
The following two graphs show current natural gas in storage compared to each of the last 5 years and weekly storage averages and patterns.
The graph below shows the injections through the current week over the past 5 years.
Finally, the graphics below depicts the 6 to 10 day temperature range outlook from the National Weather Service.
Current Week’s Outlook