After the July prompt month came to a close yesterday, the market began to reflect a slow and steady response to the summer’s increase in cooling demand. This week’s injection of 66 Bcf (along with a revision of 4 Bcf that raised last week’s implied net change from 91 Bcf to 95 Bcf) also supported the recent bullish movement by coming in under the expectation of 71 Bcf. While this value surpassed last year’s thin injection of 48 Bcf, it still ended up short of the five-year average of 72 Bcf, and the upcoming heat forecasted across the majority of the Lower 48 could potentially supplement this upward trajectory. Despite this development, record natural gas production was reported this week by S&P Global Platts Analytics, reaching a new level of 79.8 Bcf/d. The Texas Permian Basin, Appalachian dry basins, and East Texas Haynesville regions were instrumental in this newly reported growth, so the question of how much the enduring presence of natural gas production can curb any bullish fundamentals factors such as prolonged heat and growing cooling demand remains.
Working natural gas in storage currently stands at 2,074 Bcf, which is 735 Bcf (26.2%) lower than this time last year and 501 Bcf (19.5%) lower than the five year average.
The August 2018 NYMEX Futures price began the day around $2.98/MMBtu prior to the report’s release, but has remained mostly flat at $2.97/MMBtu after a short spike.
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