Natural Gas Storage: +82 Bcf
Weekly injection came in stronger than consensus market expectations but further eroded the surplus to historical benchmarks
The U.S. Energy Information Administration reported a weekly injection of 82 Billion Cubic Feet (Bcf) in Lower 48 natural gas storage inventories for the week ending October 4, 2024 (Link). Total inventories now stand at 3,629 Bcf, 124 Bcf (3.5%) above year-ago levels and 176 Bcf (5.1%) above the 2019-2023 average for the same week.
This morning’s announced injection of 82 Bcf into underground natural gas storage inventories was the largest since the week ended May 31 and the fifth largest so far this season. Published market forecasts centered around a build of 74 Bcf and spanned from 58 to 80 Bcf, placing the actual number above the upper extreme of the range. This runs counter to what has been observed for much of the injection season, where builds have more often come in smaller than expected. However, today’s report does continue the trend of weekly injections falling shy of historical benchmarks, coming in just shy of the year-ago build of 85 Bcf and well short of the 96-Bcf addition in the five-year average.
The fact that the reported injection came in so strong compared to market expectations indicates that fundamental market models may have been underestimating production during the report week or perhaps overestimating power generation demand. With the Matterhorn Express Pipeline ramping up operations, estimating Permian production has become more challenging. At the same time, power outages in the wake of Hurricane Helene could be having a larger impact on gas demand from the generation sector than accounted for by most models.
After rallying in September, the futures market has corrected back to the downside over the past week. The prompt-month contract traded a high of $3.019 per MMBtu last Friday before reversing lower and posting 5 straight daily losses to bring benchmark pricing back below $2.70 per MMBtu. Futures pricing was lower this morning prior to the EIA report, but despite the larger-than-expected storage build, we did not see any sustained selling pressure in the wake of the release. In the hour since the storage report, we’ve seen contracts across the curve bounce from their daily lows, and the prompt-month November 2024 contract come back to virtually flat on the day.
Today’s report showed the largest net build into Salt inventories since June. Salt stocks should start building back the summer drawdown going forward until heating needs start to pick up in the South Central. Pacific storage levels were unchanged on the week, as lingering cooling load in the West propped up generation needs. All regions remain at a surplus to both last year and the five-year average, with Mountain stocks by far the highest relative to historical benchmarks, continuing to build on record levels.
The summer storage build to date is the third lowest since at least 2010, and with only four weeks remaining in the traditional injection season, this year is poised to go down as one of the lightest on record. Pinebrook Energy Advisors maintains its forecast for underground natural gas storage levels to peak near 3.85 Tcf in early November prior to the onset of winter withdrawals.
Detailed Data with Updated Charts in the Natural Gas Storage Report PDF Below:
