Market expectation was 45 Bcf and the injection report came in slightly under at 43 Bcf. Last year only 13 Bcf was injected and the five- year average stands at 53 Bcf. The market is leaning to be bullish and is not the slight under market injection that is making the push.
Weather forecasts are predicting a significant and devastating impact Hurricane Harvey is going to have in Texas. The storm is predicted to cause large amounts of rainfall that can lead to disastrous flooding and life threatening conditions. A State of Disaster was declared in 30 counties of Texas by Governor Abbott. Hurricane Harvey is expected to stall and cause 10-20 inches of rain over a large part of Southern/ Eastern Texas and Southwestern Louisiana from Friday into early next week. Many petroleum companies like Anadarko Petroleum, ExxonMobil Corp. and Royal Dutch Shell plc are shutting or slowing down operations until Hurricane Harvey clears out. The Gulf of Mexico accounts for about 17% of the total US crude oil production and 5% of the dry gas production. Many analysts are predicting major impacts to the refineries that might slow down or shut down for the storm. PointLogic Energy has stated that the potential flooding can cause large disruption in refining and could force down natural gas production. The storm can disrupt LNG exports from the Sabine Pass facility. Aggregated production from Shell, Anadarko and ExxonMobil Corp is 475 MMcf/d of gas and 130,000 b/d of oil production. The last hurricane that made landfall in Texas was Ike on September 13, 2008 as a Category 2. The 2017 hurricane season runs from June 1st through November 30th.
Working natural gas inventories currently stand at 3,125 Bcf which is within the five-year historical range. This figure is 223 Bcf (6.7%) less than this time last year and 45 Bcf (1.5%) above the five year average of 3,080.
The September 2017 NYMEX Futures price started at $2.92/MMBtu prior to the report’s release and has since increased to $2.95/MMBtu following the EIA report.
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