Natural Gas Storage: +10 Bcf
Heavy air conditioning demand leads to the lowest build of the summer so far.
The U.S. Energy Information Administration reported a weekly build of 10 Billion Cubic Feet (Bcf) in Lower 48 natural gas storage inventories for the week ending July 12, 2024 (Link). Total inventories now stand at 3,209 Bcf, 250 Bcf (8.4%) above year-ago levels and 465 Bcf (16.9%) above the 2019-2023 average for the same week.
This morning’s EIA report showed the lowest build of the summer injection season so far, covering a week in which extreme heat blanketed much of the country. The 10-Bcf build came in light compared to consensus market expectations, which were calling for an injection closer to 23 Bcf, as well as historical benchmarks. During the same week last year, 42 Bcf was added to underground inventories, while the five-year average for the same week was an addition of 49 Bcf. The surplus to each of these benchmarks is now the narrowest since late February.
Power generation demand was the strongest of the season-to-date during the report week, averaging an estimated 46 Bcf per day, which was an increase of 3 Bcf per day from the previous week. Heavy cooling load combined with a temporary hurricane-related disruption in domestic production to reduce the availability of natural gas to be added to underground stocks. Had there not been a concurrent disruption at the Freeport liquefied natural gas export terminal, the reported build would have been even smaller.
After sideways trading last week, natural gas futures pricing has resumed its downtrend so far this week. The prompt-month August NYMEX contract pushed as low as $2.015 per MMBtu yesterday after trading above $3.22 per MMBtu as recently as mid-June. However, the market has found some support today surrounding the storage report, with the lighter-than-expected nature of the build bringing some modest bullish sentiment back into the fray. Prices were already up a bit on the day and have pushed even higher in the hour since the release, with the August 2024 contract now back firmly above $2.10 per MMBtu.
Stocks increased in every region except the Pacific and the South Central. Pacific inventories were unchanged, but South Central storage levels declined by 10 Bcf, due mostly to a 9-Bcf draw from Salt storage. This was likely in response to the reduction of onshore Gulf production in wake of Hurricane Beryl, but regional supply volumes have since returned to normal.
Detailed Data with Updated Charts in the Natural Gas Storage Report PDF Below: