- The report shows a change of -78 Bcf.
- This was 6 Bcf lower than our estimate of -84 Bcf and 1 Bcf higher than the consensus average of -77 Bcf.
- LNG exports remain strong at ~4 Bcf/d, but Lower 48 production reached an all-time high yesterday at ~79 Bcf/d.
Welcome to the Weekly Natural Gas Storage Report Edition of Natural Gas Daily!
The EIA reported a -78 Bcf change in storage, bringing the total storage number to 1.682 Tcf. This compares to the -7 Bcf change last year and -118 Bcf change for the five-year average.
Going into this storage report, a Reuters survey of traders and analysts pegged the average at -77 Bcf with a range of -60 Bcf to -98 Bcf. We expected -84 Bcf and were 7 Bcf above the consensus. We were off by 6 Bcf on this storage report.
This week's storage report came in line with what consensus expected and lower than our estimate. We noted in our last week's natural gas storage report that we are currently making adjustments to our demand figures, and we are almost finished.
Price action today was interesting as EIA's initial release of the report was delayed, but price action following the report was chaotic with a gap higher followed by a gap lower. Prices have stabilized and April contracts are trading below $2.7/MMBtu. As we explained to subscribers, the $2.7 level is the big resistant level right now for natural gas. We have been consolidating in this range for a while now, and although weather for the next 15-days is expected to be mildly bullish, weather will start becoming a smaller factor in what drives prices going forward.
On the demand side, Cove Point LNG flow remains strong with US LNG flow coming in around ~4 Bcf/d. But on the supply side, we saw Lower 48 production finish February at a new record of ~79 Bcf/d. If the pace of growth continues, this bodes badly for summer gas prices as we think the curve will have to shift lower to compensate for more power burn demand. Even though we are seeing the production increases now, however, we don't see it depressing natural gas prices materially in the next 1-2 months.
Going forward, sentiment, technical, positioning, and fundamentals will start playing a bigger role in how natural gas trades. Thankfully, that also means fewer weather dailies and weather reports as well.
For next week's storage report, we have a preliminary figure of -70 Bcf.
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