As the market continued to mull the balance implications of the latest government inventory data in the context of broader supply adequacy concerns, natural gas futures advanced early Friday. The June Nymex contract was up 11.9 cents to $7.858/MMBtu at around 8:50 a.m. ET.

NGI Morning Natural Gas Price & Markets Coverage

The Energy Information Administration (EIA) on Thursday reported a 76 Bcf injection into U.S. natural gas stockpiles during the week ended May 6, a somewhat leaner print versus predictions. EIA recorded a 70 Bcf build in the year-earlier period, and the five-year average is an 82 Bcf injection.

Total Lower 48 working gas in underground storage stood at 1,643 Bcf as of May 6, 312 Bcf (minus 16.0%) below five-year average levels, according to EIA.

“Compared to degree days and normal seasonality, this week’s reported injection appears neutral or in line with the prior five-year average,” Wood Mackenzie analyst Eric Fell told clients in a note Friday. “The last four weeks have averaged 1.6 Bcf/d loose versus the five-year on a weather-adjusted basis.”

Tudor, Pickering, Holt & Co. (TPH) analysts estimated an oversupply for the latest EIA report week of roughly 4 Bcf/d, in line with the week-earlier period.

On the demand side, “movement beneath the surface” points to a “constructive trend” for liquefied natural gas exports moving forward, according to the firm.

“Feed gas demand has remained in the 12-12.5 Bcf/d range for weeks now, but as various facilities take turns at maintenance…Calcasieu Pass has ramped materially ahead of our prior modeling, reaching a peak of 1.14 Bcf/d earlier this week,” the TPH analysts said. With maintenance concluded in the weeks ahead, “we see line of sight to exports again exceeding the 14 Bcf/d threshold ahead of our modeled expectations.”

On the supply side, TPH noted recent estimates showing production above the 95 Bcf/d mark despite underperformance from the Bakken Shale. 

Maintenance in the Gulf of Mexico is “weighing on the profile,” while output from the Haynesville Shale and associated plays is “moving higher as we’d expected,” the TPH analysts said. 

After an “exceptionally volatile” week in the natural gas market, Friday’s trading could bring more of the same, according to NatGasWeather.

“We expect today’s trade will be wild as players position for another dangerous weekend to hold,” the firm said. “The overnight data was little changed but still with enough demand to prevent deficits from improving.

“But what could be more important the next few weeks is where U.S. production trends, since the expectation is it will increase to over 96 Bcf/d, just slower in getting there this spring compared to market expectations.”