Responding to the latest storage print for the week ended Aug. 16, natural gas futures moved lower Thursday as a relatively large injection foiled the recent pace of tightening supply.
The September Nymex contract was down 8.3 cents to $2.094/MMBtu ahead of the 10:30 a.m. ET government report. Prompt month futures slid as the data hit the screens to a $2.049 low. By 11 a.m. ET, the contract was trading down 12.7 cents at $2.050.
The U.S. Energy Information Administration (EIA) data outlined a 35 Bcf build to storage facilities across the Lower 48. The injection was at the high end of estimates.
A Reuters poll pegged the storage forecast at 20 Bcf to 42 Bcf, with a median increase of 27 Bcf. A Bloomberg survey outlined injections of 21 Bcf to 42 Bcf, with consensus at 25 Bcf. NGI modeled a build of 27 Bcf.
The injection compared with a build of 23 Bcf during the same week a year ago and a five-year average increase of 41 Bcf. The total working gas supply climbed to 3,299 Bcf, dropping the surplus to 369 Bcf, or 12.6% above the five-year average.
Weather during the reporting week was warmer than normal in the West and South, NatGasWeather said. Temperatures were cooler than normal in the East, Midwest and the Plains
By region, the Midwest and East led the way higher, as stocks were up 19 Bcf and 12 Bcf, respectively, according to EIA. Mountain region stocks added 3 Bcf, and Pacific region stocks were up 1 Bcf.
In the closely watched South Central region, regional supply was relatively unchanged week/week. Stocks were down 6 Bcf in salt and up 6 Bcf in nonsalt facilities.
The comparatively large injection ended a streak of bullish misses in weekly storage reports that suggested the balance had tightened considerably, NatGasWeather said. EIA reported a rare summer withdrawal of 6 Bcf for the week ending Aug. 6.
Texas was expected to cool several degrees, but the state still should be hot next week, with highs in the 90s. Comfortable temperatures in the 70s to 80s are forecast across the northern tier. As the northern areas cool several degrees, national demand was expected to ease slightly for the nine-to-15 day period.
NatGasWeather said recent and coming weather patterns could result in a gradual inventory decline from 375 Bcf to near 325 Bcf with smaller than normal builds. Further declines could come in September as long as gas production doesn’t increase, the firm said.
“The magic number for the rest of the injection season is 18.5 Bcf,” East Daley Analytics analyst Jack Weixel said on the online energy platform Enelyst. He noted that was the amount that net injections must be below the five-year average each week, “in order to not blow the doors off storage and further annihilate prices.”
Preliminary estimates submitted to Reuters for the EIA report for the week ending Aug. 23 ranged from injections of 20 Bcf to 53 Bcf, with an average increase of 36 Bcf. That would compare with an increase of 28 Bcf during the same week last year and a five-year average increase of 43 Bcf.
