The heat over the holiday last week took its toll as the EIA reported a 51 Bcf injection into storage, which ended up being a bullish value that fell short of the market expectation of 56 Bcf, last year’s build of 59 Bcf, and the five-year average of 77 Bcf. The Northeast and Great Lakes regions were hit the hardest with hot weather over the course of the week, and the rest of the Lower 48 also experienced warmer than normal patterns as well. Despite this bullish miss, weather is seemingly having less and less influence on Henry Hub futures due to the constant influx of record production. A recent and somewhat significant falloff in that production was noticed by traders this week and could be a contributing factor to any sort of potential rally, but Andy Weissman of EBW Analytics states that ” The decline in production most likely was due to pipeline maintenance and outages at gas processing plants.” That being said, Henry Hub futures have yet to truly break out in either a bullish rally or bearish freefall this summer, and our current state of fundamentals shows little indication of any new developments.
Working natural gas in storage currently stands at 2,203 Bcf, which is 725 Bcf (24.8%) lower than this time last year and 519 Bcf (19.1%) lower than the five year average.
The August 2018 NYMEX Futures price began the day around $2.81/MMBtu prior to the report’s release, but has since dropped to $2.80/MMBtu.
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