The Energy Information Administration (EIA) reported a 98 Bcf injection into natural gas inventories for the week ending June 4, falling within a fairly tight range of expectations.
Although the figure failed to reach triple-digit status, futures prices retreated from earlier highs. The July Nymex futures contract was trading at around $3.190/MMBtu ahead of the EIA report, but then slipped to around $3.170 as the print crossed trading desks. By 11 a.m. ET, the prompt month was at $3.157, up 2.8 cents from Wednesday’s close.
“This doesn’t do much to alter our view, which remains that the market has outrun the fundamentals, at least for now,” said Bespoke Weather Services.
The market, according to Bespoke, “still is at risk for some pullback, which could be underway currently.” Hot weather is the main bullish item the firm sees that limits downside risks until the market proves it can tighten on a weather-adjusted basis. “On that, we shall see.”
Estimates ahead of the EIA report had pointed to an injection in the 90s to low 100s Bcf.
A Bloomberg survey produced an injection range between 91 Bcf and 104 Bcf, with a median forecast of 100 Bcf. A Wall Street Journal had a wider range up to 111 Bcf, with an average build of 100 Bcf. Reuters poll estimates ranged from a build of 90 Bcf to 110 Bcf, with a median injection of 97 Bcf. NGI modeled a 100 Bcf build for the report.
Last year, EIA recorded a 95 Bcf injection for the similar period, and the five-year average is a build of 92 Bcf.
Broken down by region, the East added 32 Bcf into storage, and the Midwest added 25 Bcf, according to EIA. South Central stocks climbed by 24 Bcf, including 22 Bcf into nonsalt facilities and 2 Bcf into salts. The Mountain and Pacific regions each rose by less than 10 Bcf.
Total working gas in storage as of June 4 stood at 2,411 Bcf, which is 383 Bcf below last year and 55 Bcf below the five-year average, EIA said.
Participants on The Desk’s online energy chat Enelyst noted that reduced liquefied natural gas (LNG) demand has loosened up supply/demand balances. However, once the maintenance season concludes, a much tighter backdrop could develop.
“July could be quite tight, especially if production starts to taper and LNG/Mexican exports pick up,” said Enelyst managing director Het Shah.
Shah was joined by Criterion Research LLC analyst James Bevan, who said exports to Mexico have room to grow. He noted that peak exports south of the border typically don’t occur until August or September, and there appears to be about 0.5 Bcf/d or more of runway.
“The trend has been rising since April, so we will see if it can ramp that high,” Bevan said.LNG capacity also is set to climb. Criterion Research is modeling about half of Calcasieu Pass LNG’s capacity coming online before the end of the year. Sabine Pass LNG’s sixth production unit also is expected online in December.
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