Leading up to todays EIA Natural Gas Storage Report, Natural gas prices ended lower on Friday due to all the good news being out regarding the warmer than normal weather for the 6-10 day forecasts. The September wholesale natural gas contract fell $0.062 settling at $2.772 on the day or 2.22%, The U.S. Energy Information Administration (EIA) reported last Thursday morning that U.S. natural gas stocks decreased by 6 billion cubic feet for the week ending July 29.
Analysts surveyed by Reuters were expecting a storage addition of around 2 billion cubic feet. The five-year average for the week is an injection of around 54 billion cubic feet, and last year’s storage addition for the week totaled 41 billion cubic feet. Natural gas inventories rose by 17 billion cubic feet in the week ending July 15.
It was the first drawdown in a summer week since the period ending Aug. 4, 2006, according to the EIA, and showed a significant decline from the same week last July, when inventories grew 41 bcf. A storage drawdown during the gas injection season is practically unheard of. A combination of hot weather and reduced production are primarily responsible for the decrease. Natural gas producers have been cutting production in an effort to reduce the amount of gas in storage when the heating season begins in November so that gas prices will improve.
Natural gas markets initially tried to rally during the course of the day on Wednesday, but quickly turned back down. Most analyst feel it will continue much lower, probably reaching towards the $2.50 level.
EIA Natural Gas Storage Report 8-11-16
Working gas in storage was 3,317 Bcf as of Friday, August 5, 2016, according to EIA estimates. This represents a net increase of 29 Bcf from (the previous week.) Stocks were 361 Bcf higher than last year at this time and 440 Bcf above the five-year average of 2,877 Bcf. At 3,317 Bcf, total working gas is above the five-year historical range.
Analysts expected a build of about 21 bcf. As of 10:32 ET, natural gas futures were trading lower by 0.8% to $2.541.
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