As we enter the home stretch of injection season, this week’s build of 90 Bcf managed to surprise no one as it fell directly in line with multiple market expectations that ranged from 90 to 92 Bcf while additionally settling in a similar range against last year’s injection (87 Bcf) and the five-year average (92 Bcf). Despite the uneventful injection, NYMEX futures are holding tight to the recent gains that have occurred over the past few weeks, most of which can be attributed to the forecast of cooler-than-normal weather patterns extending their stay in key demand areas such as the East and South Central regions of the Lower 48. The storage inventory deficit of over 600 Bcf against the five-year average has yet to see any substantial relief, ironically adding more fuel to the fire and potential for sustained increases in prices for the current contract month of November, as well as the NYMEX Winter Strip average of $3.299/MMBtu. In other fundamental news, Hurricane Michael, expected to bring production loss due to evacuations of multiple producing platforms along with demand destruction across the Panhandle and Carolinas, was recently downgraded to a tropical storm, but the effects of this weather event will be fully realized in next week’s report.
Working natural gas in storage currently stands at 2,956 Bcf, which is 627 Bcf (17.5%) lower than this time last year and 607 Bcf (17.0%) lower than the five-year average.
The November 2018 NYMEX Futures price began the day around $3.21/MMBtu prior to the report’s release, but has since decreased to $3.19/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