Utilities injected 50 Bcf of natural gas into storage for the week ended April 12, the U.S. Energy Information Administration (EIA) reported on Thursday. The result, near market expectations and avoiding the previous week’s bearish print, sent futures higher.
Ahead of the 10:30 a.m. ET government report, May Nymex futures were trading 4.9 cents higher day/day at $1.761/MMBtu. After the data was released, the contract was trading up 6.0 cents at $1.772. By around 11 a.m. ET, it was trading 5.8 cents above Wednesday’s regular session close of $1.712.
The reported build of 50 Bcf was less than the five-year average increase of 61 Bcf and the year-ago injection of 61 Bcf.
The EIA print increased Lower 48 inventories to 2,333 Bcf, a surplus of 622 Bcf, or 36% above the five-year average. The previous week’s build of 24 Bcf was in line with the five-year average, but it had surpassed survey estimates.
The market was watching Thursday’s print closely to see “if last week's bearish surprise was a one-off or an indicator of loosening fundamentals,” EBW Analytics Group analyst Eli Rubin said.
Prior to Thursday’s report, NGI modeled a 55 Bcf increase in inventories. A Reuters poll spanned injection estimates of 44 Bcf to 56 Bcf, with a median build of 49 Bcf. Bloomberg’s survey generated a similar range and a median of 51 Bcf.
By region, the East showed an increase of 17 Bcf, while the Midwest increased stocks by 16 Bcf. In the South Central region, where West Texas gas prices have been stuck in negative territory, inventories increased by 15 Bcf, including a 1 Bcf build for salts and 15 Bcf increase for nonsalt facilities. Totals may not equal the sum because of independent rounding, EIA said.
Meanwhile, Mountain region stocks added 2 Bcf and Pacific inventories gained 1 Bcf.
While the salt build slowed down in the week, inventories remained at 300 Bcf, or 26% above the five-year average. Salt storage broke out of its five-year range last winter as the market relied on the flexible storage option before the injection season.
“That South Central inventory is scary,” East Daley Analytics analyst Jack Weixel said on the online platform Enelyst. He warned that such high levels could leave the Gulf Coast unable to absorb surplus gas if there is a hurricane later this year that shutters liquefied natural gas export terminals. “How do you like 16-17 Bcf/d of demand bottled up in a region with no capacity to inject?”
Looking ahead to the week ending April 19, early estimates submitted to Reuters ranged between a withdrawal of 70 Bcf and an injection of 87 Bcf, with an average increase of 64 Bcf. That compares with an injection of 77 Bcf a year earlier and a five-year average increase of 59 Bcf.
“Bigger picture, surpluses will be near 600 Bcf through early May,” NatGasWeather said. “It will then be up to hotter-than-normal mid and late May temperatures if surpluses are to be materially reduced.”
