The U.S. Energy Information Administration reported a weekly draw of 6 Billion Cubic Feet (Bcf) in Lower 48 natural gas storage inventories for the week ending August 9, 2024 (Link). Total inventories now stand at 3,264 Bcf, 209 Bcf (6.8%) above year-ago levels and 375 Bcf (13.0%) above the 2019-2023 average for the same week.
This morning’s EIA storage report showed just the fourth summer withdrawal from working natural gas inventories since record keeping started in 1994, and the first such draw since July 2016. Consensus projections estimated that storage would be unchanged for the week, although some were calling for a net withdrawal of as much as 12 Bcf. This marked the third straight report in which the actual data came in more bullish than the average forecasts, indicating that the fundamental balance may in fact be tighter than most assumptions. This number took a significant chunk out of the storage surplus, as five-year average and year-ago stocks increased by 43 and 33 Bcf, respectively, for the same week.
Previous summer storage deductions occurred during especially hot periods and against a backdrop of overall tight market conditions. While the most recent report week was indeed warmer than average on a population-weighted basis, cooling degree days were actually lower than the week ended July 19, 2024, which saw overall inventories increase by 22 Bcf. The implication here that the market was roughly 4 Bcf per day tighter during the most recent week compared to an even hotter week in mid-July. While some of this can be attributed to seasonally waning solar and wind output driving a heavier reliance on natural gas-fired generation, it could also suggest that domestic production estimates may be overshooting reality given the consistently tight storage numbers in recent weeks.
2024 has seen two of the five tightest mid-summer (May-Sept) storage weeks on record
Regardless of the reasoning, today’s report elicited a bullish market response. Futures prices had been relatively flat heading into the release, but the market immediately pushed higher as the news was digested. In ensuing hour, the prompt-month contract is staging a serious test of near-term resistance surrounding $2.27 per MMBtu and is currently on track for its second straight weekly gain.
The South-Central Region was yet again the biggest driver in determining the overall net storage change. Stocks in that region dropped by 27 Bcf, including a 14-Bcf reduction in salt storage. This marks the fifth consecutive week of declining inventories in that area of the country, with temperature forecasts suggesting lingering heat in that market into late August.
Detailed Data with Updated Charts in the Natural Gas Storage Report PDF Below: