Natural gas prices traded flat, again, following an uninspiring weekly EIA storage report.
Today's storage injection came in at an expected 73 Bcf , slightly below pre-report expectations but still a healthy build nevertheless. Current gas in storage is 3,334 Bcf with 7 weeks to go in the current injection season. Today's storage build fell under the 5-year average for only the 5th time during this current injection seasonal narrowing the surplus of gas in storage relative to the 5-year average from 4.1% last week to 3.9%.
If upcoming storage injections over the next 7 weeks replicate the injections seen over the past 5 years during this time period, there will be 3,907 Bcf of gas in storage at the end of October, just 22 Bcf below the all-time peak storage high reached in 2012.
The market continues to find support from shorter-term weather forecasts which have kept prices in a sideways range for the past 4 months. Once summer cooling demands ends, the market will be faced with a key test of underlying price strength.
On the production front, dry-natural gas production fell for week ended 09-16 declining by .8% to 71.9 Bcf per day according to EIA and Bentek. Production peaked at an all-time high of 74.3 Bcf per day in December 2014 but has fallen by 2.4 Bcf per day or 3,2% since then. Production may finally be affected by the natural gas rig count which dropped to an all-time low of 196 rigs in last week's Baker-Hughes rig count report.
Falling production could be a bullish factor for natural gas possibly later this year. Near term, increasing storage injections and the possibility for decreased summer cooling demand should keep prices under pressure as the market attempts to carve out a post-summer seasonal low.
No comments:
Post a Comment