The Energy Information Administration (EIA) reported Thursday morning that the natural gas storage deficit to the record-setting levels of last year was virtually erased during the week ending Oct. 22 as 71 Bcf was deposited into inventories. However, it appeared traders had been expecting a somewhat larger injection for the week as December natural gas futures -- in the contract's first regular session action as the front month -- recorded a high of $3.924 before closing out the regular session at $3.890, up 12.7 cents from Wednesday's close.
Leading up to the 10:30 a.m. EDT report, the December contract traded down to a low of $3.656, but in the minutes immediately following the fresh inventory data the prompt-month contract jumped higher to $3.814.
Heading into the report, there appeared to be a wide injection estimate range from the industry. A Dow Jones survey of 16 industry players produced a 60-92 Bcf injection range with the average prediction coming in at 73 Bcf.
Citi Futures Perspective analyst Tim Evans, who had revised his build estimate Wednesday from 60 Bcf to 66 Bcf, noted that the 71 Bcf addition still fell just below industry consensus.
"The build was a bit more than our model had forecast, but was just below the newswire consensus for a 73 Bcf net injection," he said. "The build was bearish relative to the 45 Bcf five-year average however, adding 26 Bcf onto the year-on-five-year average surplus. We also see at least one more bearish report before the market encounters enough heating demand to bring things back into a more even balance between supply and demand."
In addition to being larger than the five-year average injection for the week, the actual 71 Bcf build was almost three times larger than last year's date-adjusted 24 Bcf build for the week.
As of Oct. 22, working gas in storage stood at 3,754 Bcf, according to EIA estimates. The injection cut the year-on-year deficit to 1 Bcf while blowing out the year-on-five-year average surplus to 312 Bcf. For the week the East and Producing regions added 34 Bcf and 31 Bcf, while the West Region chipped in 6 Bcf.
If forecasts by the National Weather Service (NWS) prove correct, above-normal injections are likely next week as well. NWS predicts well below normal accumulations of heating degree days (HDD) for the week ended Oct. 30 for large eastern and Midwest energy markets. New England is expected to see 71 HDD, or 58 below normal, and New York, New Jersey, and Pennsylvania are forecast to experience 52 HDD, or 63 less than their normal tally. The industrialized Midwest from Ohio to Wisconsin is seen enduring 72 HDD, or 53 below their normal accumulation at this time of year.
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