Natural gas futures shot higher Thursday morning after the Energy Information Administration (EIA) reported a storage injection that was quite a bit less than what the market was expecting.
EIA reported a 17 Bcf storage injection in its 10:30 a.m. EDT release, about 9 Bcf less than what traders and analysts were calculating. September futures reached a high of $2.816 immediately after the figures were released, and by 10:45 a.m. September was trading at $2.811, up 13.9 cents from Wednesday's settlement.
"We were hearing a number from 24 to 28 Bcf and 26 Bcf was kind of the average," a New York floor trader told NGI. "That number coming out so low gave confidence to anybody who was long, and anybody who got caught short got burned."
Analysts were pointing at a miscalculation of power burn. "The smaller-than-expected 17-Bcf net injection for last week was less than expected and bullish compared with the 52-Bcf five-year average for the date," said Tim Evans of Citi Futures Perspective. "It was a second consecutive bullish miss, adding to the likelihood that power sector demand has been more sensitive to summer heat than anticipated, something that will likely carry over into the data for the next few weeks."
Others were more animated. "Are you kidding me?" said John Sodergreen, editor of The Desk weekly storage survey. "There was some serious activity going on in South Central, but Midwest was about par. The South Central was a greater draw than anyone expected, and it's a situation where there is a lack of transparency and nobody knows what the hell is going on."
Inventories now stand at 3,294 Bcf and are 436 Bcf greater than last year and 524 Bcf more than the five-year average. In the East Region 18 Bcf was injected, and the Midwest Region saw inventories increase by 14 Bcf. Stocks in the Mountain Region rose 3 Bcf, and the Pacific Region was unchanged. The South Central Region, however, fell 18 Bcf.
Salt cavern storage was down 13 Bcf at 336 Bcf, while the non-salt cavern figure was lower by 4 Bcf at 897 Bcf.