Weekly

The head of the Energy Information Administration’s weekly storage report said last Wednesday that there would be a close examination of last week’s surprising announcement of a 49 Bcf net withdrawal of working gas from storage during the week ending Dec. 19. The withdrawal was much larger than anyone in the marketplace expected and exceeded the five-year average of storage withdrawals, triggering a massive $1.18 increase in the December futures contract on the day of expiration.

Southern Natural began posting weekly storage data every Monday (or Tuesday if Monday is a holiday). Total working storage capacity on Southern’s system is 60 Bcf. As of the end of last Thursday, Sept. 2, estimated working storage inventory was about 53.6 Bcf, or 89% of capacity. At the same time last year, estimated working storage inventory was about 49.6 Bcf, or about 83% of capacity.

Going into its seventh week of operation, the derivatives auction based on the EIA’s weekly natural gas storage report continues to grow, its sponsors say. Launched by ICAP Energy, Goldman Sachs and Nymex in early June, the electronic options auction looks to help market participants “manage exposure” to the impact of reported natural gas storage inventories released by the Energy Information Administration (EIA) each week (see Daily GPI, April 29).

Getting a slightly bullish boost from the Energy Information Administration’s (EIA) weekly gas storage report, July natural gas futures on Thursday closed up 7 cents at $6.485. The EIA reported that 85 Bcf of gas was injected into underground storage for the week ended June 18.

Boosted by a weekly storage withdrawal (59 Bcf) that exceeded all market expectations, the natural gas futures market vaulted higher again Thursday morning, soaring past the important $6.00 mark. After pausing to trade sideways during the middle of the session, the January contract was goosed higher again in the final 90 minutes of trading Thursday.

In the North Baja California LNG race, which has lead changes almost weekly, Marathon Oil Corp. pulled ahead Wednesday with a memorandum of understanding (MOU) for newly developed Indonesian liquefied natural gas (LNG) supplies for its proposed receiving terminal along the Pacific Coast of Mexico. This is the first supply deal of several competing LNG proposals for the Baja peninsula.

In the North Baja California LNG race, which has lead changes almost weekly, Marathon Oil Corp. pulled ahead Wednesday with a memorandum of understanding (MOU) for newly developed Indonesian liquefied natural gas (LNG) supplies for its proposed receiving terminal along the Pacific Coast of Mexico. This is the first supply deal of several competing LNG proposals for the Baja peninsula.

EIA’s report of a 93 Bcf weekly gas storage injection was in line with expectations, but futures traders apparently looked ahead to next week’s storage report which could feature a much lower number because of the Gulf production shut ins this week. Futures went off the board at $5.050, and eastern cash prices fell only about 3-8 cents on average. Western cash, however, once again showed strength, posting mainly nickel gains.

In a textbook display of just how large an impact the weekly Energy Information Administration (EIA) gas inventory report can have on the market, natural gas prices plummeted Thursday moments after the EIA said that a hefty 111 Bcf was added to underground storage facilities last week. After a quick dip lower at 10:30 a.m. EDT, sellers took a moment to catch their breath, but bulls could not muster much of a rally. Bears made use of their second wind to punish prices lower again Thursday afternoon. The August contract finished at $5.258, down 26.2 cents for the session.