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No Help For Price Bulls; Natural Gas Storage Continues to Build North of 4 Tcf

Natural gas futures tumbled to session lows Thursday morning after the Energy Information Administration (EIA) reported a storage injection that was about in line with market expectations.

EIA reported a 30 Bcf storage injection in its 10:30 a.m. EST release for the week ending Nov. 11, a touch less than what surveys and estimates by analysts were expecting, but the build placed storage inventories in new record territory.

December futures reached a low of $2.690 immediately after the figures were released, and by 10:45 a.m., December was trading at $2.693, down 7.1 cents from Wednesday's settlement.

"We were hearing 31 Bcf so there wasn't much of a difference there," said a New York floor trader. "I didn't think a 30 Bcf build versus a 31 Bcf would make all that much difference.

"We've been above the one-year and five-year storage averages for how long now? There just isn't any upward swing to this market."

Others also recognized the broader bearish implications. "The 30 Bcf net injections was in line with consensus expectations and so neutral on that score," said Tim Evans of Citi Futures Perspective. "At the same time, we do note the bearish comparison with the 3 Bcf five-year average figure, as well as the total reaching a new all-time high of 4,047 Bcf. So perhaps the bottom line on the report is that it was fundamentally bearish, as expected."

Inventories now stand at 4,047 Bcf and are 51 Bcf greater than last year and 216 Bcf more than the five-year average.

Working gas in storage has now set an all-time record two weeks running. Current storage levels sit 38 Bcf above last year’s high mark of 4,009 Bcf for the week ending Nov. 20, 2015, which previously held the record until last week. EIA's demonstrated maximum capacity for storage is 4,343 Bcf.

For the week, the East Region saw 2 Bcf withdrawn and the Midwest Region saw inventories increase by 7 Bcf. Stocks in the Mountain Region rose 4 Bcf, and the Pacific Region was up by 1 Bcf. The South Central Region added 20 Bcf.

Salt cavern storage was up 9 Bcf at 394 Bcf, while the non-salt cavern figure was up 11 Bcf at 968 Bcf.

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