Natural Gas Storage Report: Injection Season Week 6 (Week Ending May 12, 2017)

Mitch Marzuola, Energy Pricing Analyst

This past week showed us a historically lean build at 68 Bcf that still managed to surpass market expectations of a 61 Bcf injection. While bearish compared to last year’s 71 Bcf build and five-year average of 87 Bcf, few weather-related factors have been able to move the needle in any discernable direction yet again, even with a slightly unseasonal heat wave along the Atlantic seaboard and forecasts of a potential transition from a mild La Nina to a neutral or weak El Nino in the coming summer months. Even in the face of this bearish injection, little movement has been seen reflecting this on NYMEX.

As mentioned last week, an interesting fundamental piece of news to continue to track is the FERC halt of horizontal directional drilling (HDD) due to a 2 million gallon drilling fluid spill at the 711-mile Rover pipeline located near Stark County in Ohio. Two laterals in particular, Clarington and Sherwood, are being scrutinized and mobilized with additional environmental personnel. This development could further delay the completion of the pipeline’s already lagging schedule, which has its first phase set to be finished in July. It’s expected to open up new takeaway capacity from Marcellus and Utica shales at 3.25 Bcf a day while providing transportation capabilities from Pennsylvania, Ohio, and West Virginia to Midwest markets, the Gulf Coast, and even Canada.

Working natural gas inventories currently stand at 2,369 Bcf. This figure is 375 Bcf (13.7%) less than this time last year and 256 Bcf (12.1%) above the five year average.

The June 2017 NYMEX Future sat at $3.19/MMBtu prior to the report’s release and has since dipped slightly to $3.18/MMBtu following the EIA report.

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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.

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The following table shows the injection numbers we will need to average by week to hit selected historical levels:

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The following two graphs show current natural gas in storage compared to each of the last 5 years and weekly storage averages and patterns.

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The graph below shows the injections through the current week over the past 5 years. 

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Finally, the graphic below depicts the 6 to 10 day temperature range outlook from the National Weather Service. 

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