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Analysis Of Weekly EIA Working Gas Storage Data On Daily Basis – A New Look On Working Gas Storage Numbers

|About: The United States Natural Gas ETF, LP (UNG)
Summary

•A method to transform EIA weekly working gas storage data into a daily format was proposed.

•Comparing refill of working gas in storage so far from past years by imputed weeks was performed by using the new method.

•The result shows that we have a little better working gas refill progress so far.

According to US Energy Information Administration EIA's newly released report on Thursday, May 15, 2014, working gas (dry natural gas) in storage was 1,160 Bcf (Billion cubic feet) as of Friday, May 9, 2014,. This represents a net increase of 105 Bcf from the previous week. Since the beginning of current injection season (April to October) the total net change of working gas in storage was 334 Bcf as shown in Table 1.

Table 1: Summary of Net Increase of Working Gas in Underground Storage

Since Beginning of Injection Season

   

Week Ending

Storage (NYSE:BCF)

Increase from Last Week

 

Mar 28, 2014

822

     

Apr 04, 2014

826

4

   

Apr 11, 2014

850

24

   

Apr 18, 2014

899

49

   

Apr 25, 2014

981

82

   

May 02, 2014

1,055

74

   

May 09, 2014

1,160

105

   

Total Increase:

 

334

   

Note: Compiled from EIA data

   

Week ending April 11 week was the first week of 2014 Injection Season.

 

Is the net change of 105 Bcf in the new release good or bad? Can we bring back the working gas stock to normal by the end of the current injection season? We can compare it from the history for a suggestion. Because EIA only publishes weekly working gas in storage data, it is hard to compare them from the past years on weekly basis accurately. To address this issue, I try to transform EIA's weekly working gas storage data into a workable structure on daily basis by averaging difference between two weeks and adding the difference to each day during the week as illustrated in Table 2. In this way we can compare the working gas storage numbers on the same month and same day among different years more accurately.

Table 2. Method to Transform Weekly EIA Working Gas Storage into Daily Format

 

EIA Weekly Released

Calculation on Daily Basis

 

Week Ending

Storage

Net Change from

Daily Change

Dates in the

Daily Storage

   

Last Week

 

Week

 

21-Apr-06

1851

80

11.43

15-Apr-06

1782

   

80

11.43

16-Apr-06

1794

   

80

11.43

17-Apr-06

1805

   

80

11.43

18-Apr-06

1817

   

80

11.43

19-Apr-06

1828

   

80

11.43

20-Apr-06

1840

   

80

11.43

21-Apr-06

1851

28-Apr-06

1904

53

7.57

22-Apr-06

1859

   

53

7.57

23-Apr-06

1866

   

53

7.57

24-Apr-06

1874

   

53

7.57

25-Apr-06

1881

   

53

7.57

26-Apr-06

1889

   

53

7.57

27-Apr-06

1896

   

53

7.57

28-Apr-06

1904

Note: Daily change is calculated by dividing the change from the last week by 7.

 

Only two weeks in 2006 were selected here

     

I am going to compare the current working gas in storage numbers from the past. First, I picked up the recent years from 2007 to 2013 as shown in Table 3. The table shows since the beginning this injection season the net change of storage beats the average of seven years in each week consecutively. So far we have an accumulated net increase 42 Bcf more than seven year's average. This is not bad. But keep in mind, the net injections in the last seven years were far from EIA's projected 2,600 Bcf (STEO April-2014) as shown in Table 4. The average net injection of the last seven years was only 2,046 Bcf that is 554 Bcf less than 2,600 Bcf projected by EIA.

Table 3. Comparison of Working Gas Storages by Week*

 

_2007 - 2013_

_________2014___________

7 Days

Average of

Change from

Storage

Change from

Compare to

Ending on

Storage

Last Week

 

Last Week

2007 - 2013

28-Mar

1695

.

822

   

4-Apr

1704

9

826

4

-5

11-Apr

1731

27

850

24

-3

18-Apr

1768

37

899

49

12

25-Apr

1832

64

981

82

18

2-May

1905

73

1,055

74

1

9-May

1991

86

1,160

105

19

Total

     

334

42

* EIA's weekly reports are ending Friday. This table uses 2014's Friday's months

and days to select weeks in other years.

   

Table 4. Net Changes of Working Gas Storage

in Injection Seasons from 2007 to 2013

Year

Net Change

 

2007

1,964

 

2008

2,172

 

2009

2,179

 

2010

2,217

 

2011

2,223

 

2012

1,486

 

2013

2,081

 

Average of 7 Years

2,046

 

Note: Compiled from EIA data.

Injection Season: April - October.

 

Though we could argue that since the beginning of the injection season, we have 42 Bcf more than the last seven years (Table 3), if we could keep this rate of injection, we would fill a gap of 554 Bcf (2,600 - 2,046). I would like to crack numbers further. I supplied Figure 1 that illustrates the net changes of working gas in storage by withdrawal and injection seasons.

Fig. 1 Comparisons of Natural Gas Withdrawal and Injection Amount by Seasons

From Figure 1 we notice that year 2003 had a net injection of 2,406 Bcf that was close to EIA's projection number 2,600 Bcf. Thus I picked up year 2003 to do a case study which was summarized in Table 5.

Table 5. Comparison of Working Gas Storages by Week*

 
 

__2003__

___2014___

2014 Versus 2003

7 Days

 

Change from

Change from

Difference of

Ending on

Storage

Last Week

Storage

Last Week

Storage

Changes#

28-Mar

696

.

822

     

4-Apr

688

-8

826

4

138

12

11-Apr

642

-46

850

24

208

70

18-Apr

702

60

899

49

197

-11

25-Apr

754

52

981

82

227

30

2-May

836

82

1,055

74

219

-8

9-May

900

64

1,160

105

260

41

Total

 

212

 

334

 

41

* EIA's weekly reports are ending on Friday. This table uses 2014's Friday's months

and days to select weeks in 2003.

       

# Difference of the changes from the last week between two years.

 

Table 5 tells us that so far we have 41 Bcf more refill than 2003's as a whole. After these analyses, I think we are on the way to normalize the depleted working gas in storage if the current refill momentum is kept. Please note the EIA's target of 3,422 Bcf working gas in storage by the end of October is still about 11% below the five-year average (3,842 Bcf). This would contribute to support the current working natural gas price around $4.5/mmBtu. I here advise readers to be cautious in trading United States Natural Gas (NYSEARCA:UNG), especially holding short positions for long time. Experienced traders may make speculative bets on fluctuations of natural gas price though. In my opinion, natural gas price will have little chance to be below $4/mmBtu and stay there even for weeks in next 6 months, unless we have an unusual warm winter. At last, I here prepared Table 6 that may be useful for readers interested in trading natural gas related securities. Readers with less statistic knowledge can only pay attention to mean, minimum and maximum though.

Table 6. Simple Statistics of Natural Gas Injection Amount by Months in Injection Seasons from 2000-2013

 

Mean

     

Standard

Standard

95% Confidence Interval

Month

(Average)

Minimum

Maximum

Median

Deviation

Error

Low Limit

High Limit

April

192

46

360

197

80

21

146

238

May

387

231

479

402

69

18

347

427

June

354

232

469

342

62

16

318

389

July

281

134

385

282

76

20

237

325

August

244

127

350

240

69

18

204

284

September

328

269

411

313

47

12

301

355

October

239

87

385

245

79

21

194

285

                 

Sum of 7 Months

2,025

1,126

2,839

     

1,747

2,303

                 

Note: Injection Season: April - October.

           

95% confidence interval is computed assuming net changes (Injection amount) are normally distributed over years by months in inject season and should be interpreted with caution.

           

Table is compiled from EIA data.

           

I am keeping a close watch on the progress of working gas in storage refill and will share my research result with Seeking Alpha readers accordingly.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.