The Energy Information Administration (EIA) reported a 63 Bcf build into Lower 48 gas stocks for the week ended Aug. 31, a number that fell in line with estimates.
Nymex natural gas futures, which were coming off a steep decline over the previous two sessions, registered a muted reaction to the news, trading either side of $2.780/MMBtu.
The 63 Bcf injection from EIA compares to a five-year average 65 Bcf build and a 60 Bcf build recorded in the year-ago period. The figure falls between major surveys that had pointed to a build in the low 60s Bcf; Intercontinental Exchange (ICE) EIA Financial Weekly Index futures settled at 64 Bcf a day earlier.
As the number crossed trading desks at 10:30 a.m. ET, the front month contract added a little over a penny before quickly reversing to trade slightly lower than it had prior to EIA’s report.
By 11 a.m. ET, the October contract was trading around $2.782, down about 1.3 cents from Wednesday’s settle. The strip was also weaker, with January down about 1.3 to around $2.982.
“After a couple weeks of missing back and forth between opposite sides, this print confirms our strong reading of balance over the past month, and indicates a sizable loosening in the market over the last few weeks,” Bespoke Weather Services said. “With power burns beginning to tighten up, we still are not sure prices need to fall below $2.75 to prevent further loosening, especially given how low storage levels are to year-ago and five-year-average levels.
“However, we do not see this print as indicating much of a bullish catalyst,” as it “fits perfectly” with ICE end-of-season futures at 3.35 Tcf.
Bespoke said additional loosening in the market could see inventories reach 3.4 Tcf, which it has projected for end-of-season.
Total working gas in underground storage as of Aug. 31 stood at 2,568 Bcf, 590 Bcf below the five-year average and 643 Bcf lower than year-ago levels, according to EIA.
By region, the South Central posted a net withdrawal for the week, thanks to 5 Bcf pulled from salt, offsetting 4 Bcf injected into nonsalt. The Midwest posted the largest net injection at 32 Bcf, followed by the East, which saw a build of 22 Bcf. The Mountain and Pacific regions each injected 5 Bcf, according to EIA.