The Energy Information Administration (EIA) reported a smaller-than-expected 38 Bcf injection into natural gas storage facilities for the week ending April 16.
With estimates ahead of the EIA report pointing to a build as large as 56 Bcf, Nymex futures traders harped on the news.
The May Nymex contract was trading nearly flat day/day at around $2.69/MMBtu, with 36,000 contracts traded just prior to the EIA report. As the EIA print crossed trading desks, the prompt month jumped to $2.736, up 4.4 cents from Wednesday’s close, with around 41,400 contracts traded. By 11 a.m., prices picked up another couple of cents to trade at $2.757, with more than 66,500 contracts traded.
[Natural Gas 101: Tune into NGI’s Hub & Flow podcast and catch an insightful interview with Charles Blanchard, the author of the recently published “The Extraction State: A History of Natural Gas in America.”]
The EIA’s 38 Bcf injection compares with last year’s 68 Bcf build and the 26 Bcf five-year average.
Gelber & Associates Inc. senior market analyst Dan Myers, whose storage projection was close at 39 Bcf, attributed the smaller build to chilly April weather, strong exports and some tightness that may have been masked in the prior EIA report because of the Easter holiday.
Participating on The Desk’s online chat Enelyst, Myers said a 40 Bcf injection would have indicated a “neutral balance” in supply and demand. So far, signs are pointing to continued tightness in the coming months.
In addition to the hotter weather looming around the corner, strong liquefied natural gas (LNG) pricing overseas bodes well for U.S. exports. “Based on the Japan Korea Marker/National Balancing Point forwards, it’s clear sailing,” he said.
Meanwhile, exports to Mexico also have been coming in stronger, with Myers expecting around 6.5-7 Bcf/d of flows given the completion of infrastructure south of the border.
In the Lower 48, Myers said the market has benefited from additional coal-to-gas switching with prices sinking toward $2.500 earlier this month. “That trend could reverse. We’ll be watching the price action. For now, the stronger power generation is still needed to keep things tight.”
Broken down by region, the East led with a 14 Bcf injection into storage inventories, while the South Central added 12 Bcf, according to EIA. This included a 7 Bcf build into nonsalt facilities and a 5 Bcf build into salts. Midwest stocks rose by 7 Bcf, and Pacific stocks climbed 5 Bcf. The Mountain region reported no net change in inventories.
Total working gas in storage as of April 16 stood at 1,883 Bcf, 251 Bcf below year-ago levels and 12 Bcf above the five-year average, EIA said.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |