Spring is in full swing, and with it comes the beginning of natural gas build season. Week 1 of the 2017 Injection Season was seen as a bit of a non-event, as today the EIA reported a net inflow of 10 Bcf – right in line with market expectations of a 9 Bcf build. Historically, this injection is also slightly bearish to the five year pace of a 6 Bcf injection for this time of the season. This week’s report came as no surprise to traders, as milder weather models from last week held true to form. Spring always tends to be a period for weak demand, with a gradual shift from Northeast and Midwest heating draws to the power and cooling needs of the South and West regions. Updated NWS models have taken a turn for the cooler, but key markets such as Boston and Chicago are still expected to experience less than half the initially forecast heating degree days for the month of April. Though these conditions introduce some downward pressure on the recently bullish market, traders are still preparing for what is expected to be a seasonally massive influx of cooling demand.
Working natural gas inventories currently stand at 2,061 Bcf. This figure is 416 Bcf (20.2%) less than this time last year and 263 Bcf (12.8%) above the five year average.
The May 2017 NYMEX Future was slightly elevated at $3.23/MMBtu prior to the report’s release, and has since dipped to just over $3.21/MMBtu.
Outlook for the Balance of Storage Season:
The graph below compares historical 12, 24 and 36 month strip prices and storage levels for the past 5 years.
The following table shows the injection numbers we will need to average by week to hit selected historical levels:
The following two graphs show current natural gas in storage compared to each of the last 5 years and weekly storage averages and patterns.
Finally, the graph below shows the injections through the current week over the past 5 years.