Natural gas storage inventories during the week ending Oct. 1 rose by a stunning 118 Bcf, according to the Energy Information Administration (EIA).
The triple-digit injection came in about 10 Bcf higher than market consensus and promptly sent Nymex futures, already sharply lower, tumbling further. In the minutes leading up to the EIA’s weekly storage inventory report, the November Nymex gas futures contract was trading down about 15.0 cents day/day at around $5.520/MMBtu. As the print crossed trading desks, the prompt month slid to $5.500.
However, traders appeared uncertain whether further price downside was warranted, given the still tight supply backdrop overseas and likelihood of robust export demand in the coming months. By 11 a.m. ET, November futures were back at $5.599, down only 7.6 cents from Wednesday’s close.
Ahead of the EIA report, estimates submitted to Bloomberg ranged from builds of 101 Bcf up to 114 Bcf, with a median 105 Bcf injection. A Wall Street Journal poll included injections as low as 84 Bcf, but the average still landed at a stout 102 Bcf. Reuters’ poll was wider, with high-side estimates hitting 115 Bcf and the median injection coming in at 104 Bcf. NGI modeled a 114 Bcf injection.
For comparison, the EIA recorded a 75 Bcf injection in the same week last year, while the five-year average build is 81 Bcf.
The 118 Bcf figure was the second in a row that surprised to the upside. Participants on The Desk’s online chat Enelyst attributed the hefty injection — the largest for the reference week in at least six years — to strong wind generation that grabbed some market share from gas.
“For the week ending Oct. 8, it looks like wind is half of the past two weeks,” said Enelyst managing director Het Shah.
Bespoke Weather Services chief analyst Brian Lovern called the 118 Bcf injection “a very ugly number” in terms of supply/demand balances. Using recent balances and extrapolating forward, he said the market is on pace now to reach the five-year average in terms of end-of-season storage levels, above 3.7 Tcf.
“We do see tightening in this week’s data, however, so our end-of-season estimate is below that level, for now,” Lovern said.
Mirroring comments by Shah, Lovern said the expected tightening appears mostly related to very low wind generation. However, winds are expected to reverse strongly into the weekend and early next week, “so we could loosen again as we see next week’s data.”
Broken down by region, the South Central region posted a plump 41 Bcf increase in storage inventories, including 21 Bcf in nonsalt facilities and 20 Bcf in salts, according to EIA. The Midwest added 37 Bcf to stocks, and the East added 31 Bcf. Inventories in the Mountain and Pacific regions each climbed by 5 Bcf.
Total working gas in storage as of Oct. 1 stood at 3,288 Bcf, which is still 532 Bcf below year-ago levels and 176 Bcf below the five-year average, EIA said.
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