Natural Gas Storage Report: Injection Season Week 8 (Week Ending May 26, 2017)

Mitch Marzuola, Energy Pricing Analyst

After two days of the July contract month tumbling downward 21 cents and taking out a critical support level of $3.20/MMBtu, the market looks to continue its increasingly bearish trend with an implied flow injection of 85 Bcf that exceeded the expectation of 78 Bcf. However, this build appears as an 81 Bcf net change due to the EIA issuing a 4 Bcf reclassification of reported storage values in the Mountain region from last week. The transition from the shoulder season to summer has yet to provide corresponding weather patterns, as below average temperatures, situated mostly in the southern and eastern United States, decrease the influence of anticipated cooling demand. With today’s injection, cooler-than-normal weather, and few traders willing to buy the recent dip, July could push below the $3 threshold prior to the transition into the summer cooling season.
 
Working natural gas inventories currently stand at 2,525 Bcf. This figure is 370 Bcf (12.8%) less than this time last year and 225 Bcf (9.8%) above the five year average.
 
The July 2017 NYMEX Futures price started at $3.08/MMBtu prior to the report’s release and has since dropped to $3.00/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. 

Current Week's Outlook
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Last Week's Outlook
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