In the third weekly surprise in a row, the Energy Information Administration (EIA) reported a 60 Bcf injection into natural gas storage for the week ending July 1.
Unlike the previous two weeks, though, the latest EIA data was hugely bearish to expectations. The 60 Bcf injection was about 15 Bcf lighter than estimates ahead of the report and sent natural gas futures – already sharply higher early in Thursday’s trading session – skyrocketing past $6.
The August Nymex gas futures contract was trading around $5.740/MMBtu, up about 23 cents day/day, in the minutes leading up to the EIA report and swiftly jumped to $6.10 as the print crossed trading desks. By 11 a.m. ET, the prompt month had surged as high as $6.209.
[Fundamental Shift: Will natural gas suppliers be able to sustain the higher levels of production throughout this winter and beyond? Find out by listening to the latest episode of NGI’s Hub & Flow podcast.]
“The last two numbers raised big questions. Today’s number may provide answers,” said a participant on The Desk’s online chat Enelyst following the EIA report.
Ahead of the EIA report, expectations had clustered around an injection in the mid-70s Bcf for the week ended July 1. A Reuters survey produced injection estimates that spanned 68 Bcf to 84 Bcf, with a median of 75 Bcf. Estimates submitted to Bloomberg as of Wednesday showed a median injection estimate of 75 Bcf. Predictions stretched from 70 Bcf at the low end to 85 Bcf at the high mark. A Wall Street Journal poll found an average injection expectation of 76 Bcf.
The EIA’s 60 Bcf build was on par with the five-year average and well ahead of the 25 Bcf injection seen in the similar week last year.
Broken down by region, Midwest inventories rose by a plump 27 Bcf, and East stocks added 21 Bcf, according to EIA. South Central storage increased by a net 4 Bcf, which included a 9 Bcf withdrawal from salts and a 13 Bcf build in nonsalts. Pacific stocks rose by 5 Bcf, while Mountain stocks climbed 4 Bcf.
Enelyst managing director Het Shah said the draw from salts in the South Central region was a deeper pull than he had expected. “Salts…we got a problem, especially as we enter peak summer months here.”
Looking ahead to the next EIA report, market observers on Enelyst indicated they needed some time to digest the latest storage figure. However, some said an injection in the 50 Bcf range was likely. “But this next number is on even $1 lower priced gas as today’s.”
Total working gas in storage as of July 1 stood at 2,311 Bcf, which is 261 below year-ago levels and 322 Bcf below the five-year average, EIA said.
© 2022 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |