Natural Gas Storage: +84 Bcf
EIA reports a weekly storage build slightly higher than market expectations.
The U.S. Energy Information Administration reported a weekly increase of 84 Billion Cubic Feet (Bcf) in Lower 48 natural gas storage inventories for the week ending May 24, 2024 this morning (Link to Report). This brings total inventories to 2,795 Bcf, 380 Bcf (16%) higher than year-ago levels and 586 Bcf (27%) above the average for 2019-2023 for the same week.
From an historical perspective this week’s inventory build was relatively small, with 5 of the previous 10 years (2014-2023) showing 100+ Bcf builds for the same week. When accounting for weather, however, our modeling shows this as the loosest weather-adjusted weekly storage build since week ending April 26, 2024 suggesting higher prices had an impact on coal-to-gas switching. To that point, power generation data from the EIA shows natural gas losing ground to coal since early May (chart below).
Market expectations for this report centered around 78 Bcf, so this build was slightly higher than forecast. The July 2024 NYMEX natural gas futures contract, which moved to the prompt-month position yesterday following the expiration of the June contract at $2.493 per MMBtu, was already trading lower on the day prior to the report and traded lower immediately following the data release. The July contract has recovered some of its earlier losses as of the time of writing and is currently trading $2.599, down $0.067 from yesterday’s settlement.
Digging into the regional breakout, the East and Midwest Regions saw weekly builds in line with last year and the 5-year average leaving the surpluses to those benchmarks only slightly lower. The Mountain Region continues to see very high inventory levels with current stocks sitting at 210 Bcf – a level that normally would not be seen until late September and the highest level since the EIA began breaking out storage into 5 regions in 2010.
The widely followed South Central Region (due to it being the home of the Henry Hub, the physical delivery point for the NYMEX futures contract) continues to see smaller-than-average weekly builds in storage with this week’s report marking the 5th consecutive build that lagged the 5-year average. While the surplus in the South Central Region remains high relative to the 5-year average, it is the lowest surplus of the storage regions on a percentage basis.
Detailed Data with Updated Charts in the Natural Gas Storage Report PDF below:
