Weekly Natural Gas Storage Report

Summary

• 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.

Source: EIA

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.

Analyst’s Disclosure: I am/we are short DGAZ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Comments

[Oldwizkid]

Bullish now we are low on gas and everyone needs more.

[katmandu100]

Thanks for the data.

[ofg2425y]

just as I suspected price would inch up all week

[wes.bridgeman]

The export of around 28Bcf weekly through LNG looks to be solid for many weeks to come as the EU depletes their reserves due to an epic extreme cold period. That export of natural gas will impact the storage picture for this year.

[carmetro1]

booming production but booming consumption. to me, I am not surprised if the price is going back to 2.5 again.

[bakermre]

Canada is a net exporter to USA. Only problem is restricted pipeline capacity and high tariffs/costs on gas that does get piped. Net effect tends to be restricted supplies from Canada into USA. So, that should help keep overall growth in gas storage at low end of forecasts until April. Current weather and snow storms are another plus factor for the week ahead.

[Calculus]

huge exports to Canada.

[johnjohnson79]

....Canada exports to you...

[Phantom34]

HFI

Where do you get your production numbers?

On my Bloomberg Terminal the estimate through Point Logic has around 78 for the last day of Feb.

Also something doesn't add up. Either we are using more than Point Logic has in their Estimates or the US isn't producing 78 BCf per day of dry gas.

Which one do you think it is?

[beezwax]

far away from summer demand only way is down eos SO so

[ofg2425y]

when is last time storage has been this low...1682bcf

[johnjohnson79]

Low....I want to be a bull...but let me save you from yourself. Watch the bond market on major producers...until we stop lending this continues.

[rj4103]

Be careful with this. How much is new money and hiw much is simply refinancing. A lot of deals are simply moving debt maturing over the next year or two out the maturity curve, I don't believe producers are out of control like 3 years ago using the capital markets to fund Capex.

I think many firms are spending within cash flow.

Bank lending is more conservative.

Clearly production is strong. So is demand. NG a tough commodity to balance. $3 price is good for everyone. As long as crude stays 60+, production of wet gas goes up and prevents price spikes lasting very long