Weekly Natural Gas Storage Report
- The report shows a change of -57 Bcf.
- This was 5 Bcf lower than our estimate of -62 Bcf and 1 Bcf lower than the consensus average of -58 Bcf.
- Our bullish position via a short in DGAZ was stopped out for a gain of 5.6%.
- Weather outlook along with higher than normal storage draws will keep prices supported for now.
Welcome to the Weekly Natural Gas Storage Report Edition of Natural Gas Daily!
The EIA reported a -57 Bcf change in storage, bringing the total storage number to 1.625 Tcf. This compares to the -57 Bcf change last year and -129 Bcf change for the five-year average.
Going into this storage report, a Reuters survey of traders and analysts pegged the average at -58 Bcf with a range of -44 Bcf to -69 Bcf. We expected -62 Bcf and were 4 Bcf above the consensus. We were off by 5 Bcf on this storage report.
This week's storage report came in line with what consensus expected and lower than our estimate.
Looking at the weekly fundamental set-up over the next few weeks, colder than normal weather will push demand higher and result in higher than normal storage draws. We estimate that over the next four storage reports, storage draws will be 41 Bcf higher than the 5-year average. As a result, EOS has now been revised to 1.393 Tcf.
On the price action front, today's move saw us get stopped out of our DGAZ short position for a gain of 5.6%. Weather outlook for the rest of March remains supportive, and a combination of bullish weather and technical forces could see April test the 50-day moving average at $2.86/MMBtu. However, we think this would be where the upper price band is, and we would look to make a bearish trade when prices get there.
Of course, the weather outlook could remain supportive for the rest of March and into April, so we will be keeping a close eye on that.
For now, we are out of our bullish natural gas trade. Next week's storage draw is showing a preliminary draw of 100 Bcf.
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