Industry analysts’ weekly gas storage predictions were almost entirely out of the money last week and many were left scratching their heads following the Energy Information’s (EIA) estimated 72 Bcf injection for the week ended July 16 after two prior storage reports of 109 and 108 Bcf.

“Amid returning demand from holiday related shutdowns, increased nuclear outages (which averaged 2,446 MW versus 1,336 MW in the prior week) and a 7% increase in U.S. electric output (to 85,724 GWh from 79,811 GWh in the prior week), the industry posted a moderately smaller storage refill last week,” said UBS analyst Ronald Barone. “Despite very favorable inject now/sell forward arbitrage opportunities, the EIA reported a 72 Bcf storage injection.”

This lower injection resulted in “effectively cooling recent market suggestions of supply loosening (at least for now) stemming from the past two weeks of consecutive triple-digit injections.”

Barone noted that questions remain as to how much influence “lumpy data collection” and “holiday related shutdown noise” influenced the recent figures. According to the analyst, prices in July have sloughed off a little from June. “All else equal (which admittedly is not the case when analysing these complex markets), this would suggest that weather-normalized demand should be increasing. Overall, we believe several additional weeks worth of data are required to make sense of these conflicting signals.”

Tom Saal of Miami-based Commercial Brokerage Corp. said that while he was looking for a higher number — most predictions were around 85 Bcf –, the 72 Bcf build was near historical averages. The build fell short of last year’s 77 Bcf injection during the same week, but surpassed the 69 Bcf five-year average.

“If you look at historical patterns, there is usually a drop-off during the month of July, a little pick-up for labor day and then it drops off again,” noted Saal. He said that last July the industry also saw big changes in injections, from 147 Bcf to 95 Bcf and then 77 Bcf. “There shouldn’t be any head scratching,” he said.

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