Despite the run-up to over $2.90/MMBtu on the current contract month, the market isn’t expected to see much movement today as this week’s injection of 86 Bcf came in mostly in line, if not slightly bearish, with the market expectation of 84 Bcf. Today’s build came up noticeably short of last year’s injection of 96 Bcf as well, yet managed to surpass the five-year average of 76 Bcf at the same time. Cooler, supportive weather in the Northwest, Texas, Great Plains, and Northeast certainly aided this somewhat robust build, yet the deficit of nearly 600 Bcf against the five-year average continues to have a foreboding presence as we traverse through the shoulder months into winter. Storage is predicted to end up anywhere in the range of 3.2 to 3.3 Tcf for withdrawal season, and, with only five to six weeks of injections left, these lower storage inventories could be indicative of potential price spikes should we experience a much colder than expected winter. The seemingly unending trend of dry gas production breaking daily records could offset this, but the very real possibility of cold winter will be the true test of its effect.
Working natural gas in storage currently stands at 2,722 Bcf, which is 672 Bcf (19.8%) lower than this time last year and 586 Bcf (17.7%) lower than the five-year average.
The October 2018 NYMEX Futures price began the day around $2.92/MMBtu prior to the report’s release, but has since risen to $2.93/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