Despite withdrawals in the Pacific and South Central regions, this week’s 33 Bcf injection of natural gas just barely surpassed the market expectation of 31 Bcf. After a majority of bullish builds over the past few weeks, the deficit still stands just shy of 600 Bcf against the five-year average. As we head into the last couple of months of injection season, supplementary weather patterns are expected to somewhat help rebuild storage within average levels, but an undersupplied storage picture is still certainly in frame. An upcoming storm system in the Midwest and East regions could provide some short term relief while beefing up the next few injections, but the gap of 595 Bcf will be a tough one to cross if any prolonged heat, particularly in the West, manages to stick around. That being said, NGI has stated “every EIA region except for the South Central currently sits at or below five-year minimum inventories,” so even continuous record production over 80 Bcf/d could potentially not be enough to tighten the deficit before withdrawal season.
Working natural gas in storage currently stands at 2,387 Bcf, which is 687 Bcf (22.3%) lower than this time last year and 595 Bcf (20.0%) lower than the five year average.
The September 2018 NYMEX Futures price began the day around $2.94/MMBtu prior to the report’s release, but has since fallen to $2.91/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