Futures market observers and participants braced for extreme price volatility last week in preparation for the new weekly storage survey by the Energy Information Administration (EIA), but what they got was an uncharacteristically quiet reaction from the futures market on Thursday when EIA reported a 39 Bcf weekly injection and 1,594 Bcf of working gas in storage. Prices chopped sideways amid equal parts local trader selling and commercial buying before June finished the day at $3.719, down 2.7 cents.

Although the new report, which replaced the American Gas Association’s eight-year-old survey, came in a similar format with similar data, traders apparently will need at least a week to digest the data history that accompanied the report and the slight differences in numbers, national coverage and methodology.

“We were looking for a sell-off,” a commercial-paper trader with ABN AMRO told NGI on the Nymex trading floor. “Natural [gas] had been pushed higher ahead of the new storage report, because, to be honest, we did not know what to expect. How does the new survey differ from the old one? Are the same people being polled? How are corrections going to be handled? I think it will take some time for this market to become comfortable with the new report. Under normal circumstances, I think we would have sold off today. The fact we did not is certainly bullish.”

It obviously will take some time for traders to adjust to the new survey. Not only is the market working from a new data history, but the new report is based on a statistical sample of nearly all storage operators (91%) compared to AGA’s selected sample of members and non-members (84%). EIA also has a mandatory response requirement and a deadline versus AGA’s voluntary survey. EIA has eliminated the percentage full statistic because it believes the effective full level varies regularly with changes in base and working gas levels. As a result, EIA has a different method of calculating working gas levels.

And then there’s also the obvious scheduling change. When storage used to be announced at 2 p.m. EST on Wednesdays, traders knew they had 30 minutes during which they could push prices around before the closing bell. With the storage data now issued at 10:30 a.m. on Thursday, there is a diminished sense of urgency, sources told NGI.

Observers struggled last week to determine the potential market impact of the changes in data history. On Wednesday afternoon, EIA released an analysis of seven weeks of survey testing along with a comparison with AGA’s survey. On average over the past seven weeks, EIA said its working gas data were 22 Bcf/week higher than what AGA reported. “This was significantly less than what many thought would be a 100-140 Bcf difference,” said UBS Warburg analyst Ronald Barone.

EIA began collecting weekly underground storage data on March 18 to provide an opportunity to compare estimates directly. The assessment indicates the two weekly data series are similar but certainly not identical. Their working gas estimates indicate that EIA values exceeded the AGA values by 1.5%. The difference in the Consuming Region East, the region with by far the most gas storage, was 13 Bcf, or 1.7%. A comparison of stock estimates for the other two regions showed even larger differences. The average difference for the Producing Region is 65 Bcf, or 11.5%, while the variance for the Consuming Region West, or West Region, measures 56 Bcf, or -25.4%.

EIA said the correlations between the EIA and AGA weekly storage series were high. The correlation coefficients were virtually 1.0 for both the total U.S. and the East Region. The lowest correlation value was 0.939 for the Producing Region, with the West Region at 0.967. “These very high correlations indicate that the estimates in the EIA and AGA series tend to move closely. The close movements between the two sets of storage estimates can also be seen in the changes between successive weeks recorded by the two weekly systems.”

The net changes in stocks for the total U.S. and the East Region are very close. In the Producing and West Regions, the direction of change for each series matches with one exception involving the Producing Region for the week ending April 5. In that week, the EIA series showed an increase of 4 Bcf for the Producing Region, while the AGA series had a slight decrease of 2 Bcf.

“The high degree of similarity in the net change values based on the very high correlations and graphical comparisons is an important finding in light of the keen market interest in this weekly measure,” EIA noted. “While gas stocks have important implications for market conditions in the future, the net change in stocks is the primary volumetric indicator of very recent relative supply and demand conditions. It is those conditions that drive price movements and have implications for refinements to subsequent storage acquisition strategies.”

EIA said the main factors behind the differences between the new EIA weekly survey and AGA’s report were the sampling differences and non-sampling factors, including a slightly different formula for expansion of weekly sample reports and the fact that the EIA survey is collected on a mandatory basis.

EIA’s sample coverage for the seven weeks was 92% in the East, 86% in the West, 91% in the Producing Region and 91% for the total United States. That compared with AGA coverage of 97% of the storage in the East, 75% in the West and 77% in the producing region. The full EIA analysis is available at https://tonto.eia.doe.gov/oog/info/ngs/comparison.html.

In its first public weekly survey last week, EIA reported 1,594 Bcf of working gas in storage on May 3, which was 39 Bcf more than the level the prior week of 1,555 Bcf. EIA said working gas levels currently are 540 Bcf higher than the same time last year and 344 Bcf, or 27.5%, higher than the five-year average.

The 39 Bcf weekly injection was 1 Bcf more than the prior week’s injection (reported by AGA) and compares with an injection (AGA) of 107 Bcf during the same week last year. It also puts working gas levels 54 Bcf higher than where the AGA had them in its last report for the week ending April 26.

In the East region, EIA said working gas rose 17 Bcf to 736 Bcf, which is 196 Bcf more than at the same time last year (AGA). In the West, levels rose 12 Bcf to 249 Bcf, compared to 160 Bcf at the same time last year. And in the Producing region, working gas levels rose 10 Bcf to 609 Bcf, or 255 Bcf more than at the same time last year.

The EIA’s estimate of working gas on April 26 (1,555 Bcf), was 15 Bcf higher than what AGA reported (1,540 Bcf). EIA had 13 Bcf more gas in the East region than AGA (706 Bcf), 63 Bcf more than what AGA had estimated in the Producing region (536 Bcf) and 61 Bcf less than what AGA had (298 Bcf) in the West. The differences closely match what EIA reported as average variances over the past seven weeks of testing the new series.

“Overall, we view this transition to EIA as healthy for the industry, as it aims to improve data accuracy and reliability,” said UBS’ Barone.

But in the short-term, futures traders, futures analysts and other market observers will be wandering through somewhat of a “database nightmare,” trying to sort out all the differences between the two data series and methodologies to determine the likely market impact of the new storage report, said Tim Evans, futures analyst with of New York City-based IFR Pegasus.

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