Natural Gas Storage: +22 Bcf
The build was stronger than expected but lighter than the five-year average.
The U.S. Energy Information Administration reported a weekly build of 22 Billion Cubic Feet (Bcf) in Lower 48 natural gas storage inventories for the week ending July 19, 2024 (Link). Total inventories now stand at 3,231 Bcf, 249 Bcf (8.4%) above year-ago levels and 456 Bcf (16.4%) above the 2019-2023 average for the same week.
Today’s government report showed a build of 22 Bcf into underground inventories. Coming on the heels of the previous week’s 10-Bcf injection, the data implies that the supply and demand balance loosened as temperature patterns relaxed near the end of the report week. Market expectations coming into the day centered around a build of 13 Bcf, with some analysts actually calling for a small withdrawal. The actual number was bearish relative to these industry forecasts, but the storage addition still came up shy of the five-year average the same week a year prior.
Futures pricing has been largely stagnant so far this week. Monday’s rally failed to sustain momentum, and the market has turned back lower since. The prompt-month contract is so far holding above psychological support surrounding $2.00 per MMBtu, but that level may be tested again before the week is over. Prices were down marginally on the day prior to the storage report, but the initial reaction to the release sent the market down to new daily lows.
We are now 16 weeks into the injection season, and in all but 4 weeks since the start of the summer, injections have lagged both the five-year average and year-ago builds. Inventories have lost an average of more than 1.5 Bcf per day to each benchmark as flat to lower domestic production combined with heavier domestic and export demand leads to a tighter fundamental balance. The coming weeks are likely to see stronger storage injections, especially for the reports covering the second half of July due to milder patterns expected to last through the end of the month. However, with widespread heat expected to return in August, we project inventories to generally grow at a slower-than-average pace for the balance of the season before finding a peak between 3.8 and 3.9 Tcf ahead of the winter.
Stocks posted a net decline in the South Central for the second consecutive week. Yet again, this was mostly due to a 5-Bcf reduction in salt storage, which typically responds to local market signals and is known to decline during the peak summer months. Pacific stocks were unchanged for the second straight week, while every other region recorded a net injection.
Detailed Data with Updated Charts in the Natural Gas Storage Report PDF Below: