Prices Break Through Three-Year Support, Record April Injection Reported

Natural gas storage inventories increased 92 Bcf for the week ending April 12, according to the EIA’s weekly report. This injection is slightly below the market expectation, which was an inventory increase of 95 Bcf.

Working gas storage inventories now sit at 1.247 Tcf, which is 57 Bcf below inventories at the same time last year and 414 Bcf below the five-year average.

At the time of this writing, the May 2019 contract was trading at $2.491/MMBtu, $0.026 below yesterday’s close of $2.517/MMBtu.

This week brought another larger-than-normal injection to the market, bringing inventories another step closer to the five-year average. Also this week the market broke below support at $2.522/MMBtu. This area has held support for nearly three years and had been tested multiple times before it was finally broken yesterday.

Weather has been moderate, causing low demand for power and heating. This moderate weather coupled with LNG maintenance over the past couple of weeks has caused early summer injections. Looking at the next couple of weeks, the weather remains moderate, and injections look to reach triple digits for the first time in April since 2010. The largest April injection recorded by the EIA was already broken this week and will possibly be broken again before the end of the month.

See the chart below for projections of the end-of-season storage inventories as of November 1, the end of the injection season.

This Week in Fundamentals

The summary below is based on Bloomberg’s flow data and DI analysis for the week ending April 18, 2019.

Supply:

  • Dry gas production increased 0.23 Bcf/d on the week. The slight gain was mainly due to increases in the South Central (+0.28 Bcf/d) region.
  • Canadian net imports increased 0.26 Bcf/d on the week.

Demand:

  • Domestic natural gas demand decreased 1.13 Bcf/d week over week. Power demand was the leader in the drop, falling 1.43 Bcf/d. Res/Com showed a drop of 0.04 Bcf/d, while Industrial demand increased 0.28 Bcf/d on the week.
  • LNG exports increased 1.50 Bcf/d week over week, as maintenance at Sabine Pass has been wrapped up. Mexican exports decreased 0.23 Bcf/d.

Total supply is up 0.49 Bcf/d, while total demand increased 0.14 Bcf/d week over week. With the gain in supply outpacing the gain in demand, expect the EIA to report a stronger injection next week. Last year, the same week saw a draw of 18 Bcf; the five-year average is an injection of 52 Bcf.

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