Natural Gas Storage: +18 Bcf
Stocks grew at a slower pace than expected during the report week.
The U.S. Energy Information Administration reported a weekly build of 18Billion Cubic Feet (Bcf) in Lower 48 natural gas storage inventories for the week ending July 26, 2024 (Link). Total inventories now stand at 3,249 Bcf, 252 Bcf (8.4%) above year-ago levels and 441 Bcf (15.7%) above the 2019-2023 average for the same week.
Today’s storage number came in as a surprise on the bullish side, with just 18 Bcf added to inventories compared to average market forecasts for a build near 30 Bcf. The actual number came in south of the lowest end of the range of published expectations, which spanned from a build of 20 to 45 Bcf. This continues the trend of weekly injections falling shy of the five-year average, which showed an increase of 33 Bcf for the same week. However, even with the smaller-than-expected nature of the reported number, the build did come up shy of the same week in 2023, which saw inventories increase by only 15 Bcf.
Last week’s report showed a build of 22 Bcf for the period ended July 19, so today’s data implies that the overall fundamental balance tightened on the week by just over 0.5 Bcf per day. This is surprising considering that estimated power generation demand was significantly lower during the most recent report week than the previous week due to lower temperatures on a population-weighted basis. Higher LNG export demand may have contributed to the lighter build, as the Freeport terminal was ramping back up, but other components of the supply and demand balance were estimated to be virtually unchanged compared to the week prior.
The weeks ahead will show whether today’s report is an anomaly or if there has indeed been a shift somewhere in the supply and demand balance. For now, market participants seem to be looking past the bullish data. Futures pricing has been back and forth so far this week following Monday’s expiration of the August 2024 NYMEX contract at $1.907 per MMBtu. With September on the front of the curve, prices are holding steady above $2 per MMBtu but have so far not shown any indication of a turnaround.
The initial reaction to this morning’s storage report was a very brief knee jerk to the upside, but in the hour following the release, prices have reverted to nearly flat on the day.
South Central inventories declined for the third consecutive week, thanks again mostly to a 6-Bcf drawdown in salt cavern storage across that region. Pacific inventories, which had been unchanged for two weeks, dropped by 3 Bcf as gas needs for power generation in the West remain strong amid ongoing heat and seasonally declining solar output onto the power grid.
Detailed Data with Updated Charts in the Natural Gas Storage Report PDF Below:
