The U.S. Energy Information Administration (EIA) on Thursday reported an injection of 79 Bcf of natural gas into storage for the week ended Oct. 27. The result landed near expectations and sent Nymex natural gas futures higher to narrow earlier declines.
Ahead of the 10:30 a.m. ET report, December Nymex futures were trading lower by 7 cents at around $3.425/MMBtu. After the EIA print hit the screen, the contract traded across a 5-cent range. By 11 a.m. ET, the November Nymex contract was trading at $3.460, 3.4 cents below the prior day’s close.
Before the storage report was issued, injection estimates submitted to Reuters for the week ranged from 76 Bcf to 88 Bcf and landed at a median of 81 Bcf. Bloomberg’s survey spanned builds of 76 Bcf to 84 Bcf with a median expectation of 82 Bcf.
NGI modeled an 82 Bcf injection. The five-year average injection was 57 Bcf, while the year-earlier build was 99 Bcf.
The increase for the latest week lifted inventories to 3,779 Bcf, a surplus of 205 Bcf to the five-year average of 3,574 Bcf and above the year-earlier level of 3,486 Bcf.
Plumping the build above the average level was warmer-than-normal weather for most of the Lower 48, NatGasWeather said. In addition, wind generation jumped 20% from the previous week, while solar generation declined slightly.
The biggest build was seen in the South Central region with an injection of 32 Bcf. That included an 18 Bcf build in nonsalt facilities and an increase of 14 Bcf in salts. EIA noted that totals do not always equal the sum of components because of independent rounding.
The Midwest followed with a 25 Bcf injection. The East posted an increase of 17 Bcf, while Mountain region stocks increased by 3 Bcf. Pacific inventories rose by 2 Bcf.
South Central’s build remained a focus for analysts. Mobius Risk Group noted that South Central inventories have been important because of the reported production strength in the region. Which side of 30 Bcf the build landed on was important, analysts said.
“Anything well below this mark will signify two consecutive weeks of storage data, which do not square with a spike in production, and conversely a build materially higher than this mark will have market bears of all shapes and sizes jumping at a chance to sell the front of the curve,” the Mobius analysts said before EIA issued the report.
Looking ahead to the next storage report for the week ending Nov. 3, analysts will wait an extra week. EIA is planning a systems upgrade for Nov. 8-10, which would delay the next report. On Nov. 16, EIA plans to report the Nov. 3 and Nov. 10 data.
“We've all seen the volatility the last few weeks as EIA reports flip back and forth along with the models,” Wood Mackenzie’s Eric McGuire, a natural gas analyst, said on Enelyst, an online energy chat. “This isn't too far out of the ordinary for the shoulder season and may persist until the market sees definitely when winter will finally start.”
Early estimates submitted to Reuters for the week ending Nov. 3 ranged from a withdrawal of 21 Bcf to an injection of 79 Bcf, with an average of 21 Bcf. That compares with an injection of 83 Bcf a year earlier and a five-year average of 36 Bcf.
EIA’s next report may be influenced by this week’s blast of cold air that sent gas demand soaring during the first half of the week. However, the frosty air is expected to recede and give way to a warm weekend and lighter demand, NatGasWeather said.
Next week, a cool shot across the Midwest and Northeast is forecast to lift demand toward seasonal levels, but then benign conditions return to keep a mild weather pattern in place toward Thanksgiving, the firm said.
