The U.S. Energy Information Administration (EIA) on Thursday reported an injection of 15 Bcf natural gas into storage for the week ended April 8. The result was roughly in line with expectations and bullish when compared with historic norms. Nymex natural gas futures surged in response.
Ahead of the EIA report, the May futures contract was up 3.5 cents at $7.032/MMBtu. The prompt month ticked up further to $7.041 when the EIA data was released at 10:30 ET. By around 11 a.m., it had jumped up 23.5 cents to $7.232.
With production uneven amid maintenance projects as well as global supply worries tied to Russia’s invasion of Ukraine, futures have rallied this week. Underlying the bullish sentiment is the specter of the European Union – or parts of Europe – cutting off Russian gas in protest of the war, a development that could carve a big chunk out of global supplies. Europe in recent years has depended on Russia for roughly a third of its gas.
Relatively modest storage in the United States at the start of spring adds to that backdrop.
The increase for the latest EIA week lifted inventories to 1,397 Bcf, leaving stocks well below the year-earlier level of 1,836 Bcf and the five-year average of 1,700 Bcf.
The “market is adopting a longer-term outlook with gains driven by concerns over the natural gas storage trajectory,” said EBW Analytics Group’s Eli Rubin, senior analyst.
Prior to the report, estimates ranged from injections of 5 Bcf to 29 Bcf.
Reuters’ poll produced a median increase in inventories of 13 Bcf. A Bloomberg survey showed a median build of 15 Bcf, while the average of a Wall Street Journal poll was a 12 Bcf injection.
EIA recorded a 55 Bcf increase in storage in the year-earlier period, and the five-year average was an injection of 33 Bcf.
The latest result “only exacerbates concerns about storage levels moving forward, given the degree of loosening needed to get end-of-season to a level that is comfortable ahead of next winter,” Bespoke Weather Services said. “More rallying could be on the way.”
The South Central increase of 28 Bcf led all regions and included a 15 Bcf injection into nonsalt facilities and an increase of 13 Bcf in salts, according to EIA.
The Pacific region posted a build of 4 Bcf. Elsewhere, the East and Midwest regions reported withdrawals of 12 Bcf and 3 Bcf, respectively. Mountain region stocks declined by 1 Bcf.
© 2023 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |