U.S. dry gas production has remained relatively unchanged since March of this year. Near-term falls in production are related to maintenance issues and shut-ins. Current prices still do not incentivize bringing on additional production, and we suspect dry gas production will start to see a move lower now.
On Thursday, May 20, EIA reported injection numbers of 73 bcf. That was below last year's and the five-year average. You can take a look at our report here.
Market participants need to see injection numbers below last year's and the five-year average to get bullish on natural gas. We are currently in a situation where if supply doesn't fall fast enough, storage levels could hit the limits of around 4.4 TCF.
RBN Energy estimates that by the end of the injection period, natural gas storage levels could be at 4.28 TCF. That would be just slightly above last year's storage levels. With a normal winter, storage levels should draw considerably given that last year's winter was one of the warmest on record.
Next week should see another bullish storage report, as market participants currently estimate between 75 bcf and 85 bcf of injection. Last year's build was 112 bcf and the five-year average was 98 bcf. We should start to see the glut narrow moving forward.
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