The U.S. Energy Information Administration (EIA) on Thursday reported an injection of 31 Bcf into natural gas storage for the week ending Nov. 13. The result exceeded the midpoint of analysts’ bearish estimates and punctuated market concerns about weak weather demand, keeping pressure on Nymex natural gas futures.
“It was warmer than normal over the eastern two thirds” of the Lower 48 during the report period, NatGasWeather said. The forecaster’s latest outlook calls for mild temperatures across much of the country into early December and below-average heating demand.
Ahead of the EIA report, the October contract was down 15.2 cents at $2.560/MMBtu. The prompt month dropped further to around $2.549 when the EIA data was released. By 11 a.m. ET, the December contract was down to $2.546.
Though liquefied natural gas export levels were strong during the covered week and have been throughout November, production has climbed and observers said markets are waiting for an eventual shift from fall to winter weather to bolster domestic demand. “Mother Nature is the wildest card of all,” said one participant on The Desk’s online energy platform Enelyst.
Prior to the report, a Bloomberg survey found estimates ranging from a withdrawal of 9 Bcf to an injection of 26 Bcf, with a median of a 22 Bcf increase. A Reuters poll found estimates spanning from a pull of 22 Bcf to an increase of 27 Bcf and a median of a 19 Bcf injection.
A Wall Street Journal poll, meanwhile, landed at an average injection of 10 Bcf, though estimates ranged from a decrease of 25 Bcf to an increase of 22 Bcf.
NGI modeled a 23 Bcf injection. Last year, EIA recorded a 66 Bcf withdrawal for the period.
Thursday’s report marked the second consecutive result that was bearish relative to expectations, following three straight bullish reports earlier in October.
The November injections confirm “that balances the last two weeks have really loosened compared to what they were in prior weeks,” Bespoke Weather Services said. “This is due to weakness in weather-adjusted power burns as well as production increasing more than the market was expecting.”
The build for the Nov. 13 week lifted inventories to 3,958 Bcf, above the year-earlier level of 3,665 Bcf and above the five-year average of 3,727 Bcf.
The South Central build of 13 Bcf led all regions and included an 8 Bcf injection into nonsalt facilities and an increase of 5 Bcf into salts. The Midwest and East regions followed closely with builds of 12 Bcf and 11 Bcf, respectively, according to EIA. Mountain region stocks declined by 2 Bcf, while Pacific inventories fell by 3 Bcf.
Looking ahead to next week, analysts are generally expecting a withdrawal. Bespoke modeled a 22 Bcf pull. “Lower prices should gradually tighten things back up some, though we still have a very bearish weather pattern to contend with,” the forecaster said.
EIA will release next week’s storage report on Wednesday, a day early because of the Thanksgiving holiday.
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