• Tony Zelinski

EIA Natural Gas Storage Report 9-22-16


Leading up to today's EIA Natural Gas Storage report, Natural gas wholesale contracts rose to a new 16-month high for the second day in a row on Wednesday, amid forecasts for warmer than normal temperatures across most parts of the continental U.S. and as traders looked ahead to fresh weekly information on U.S. gas inventories.

Natural gas wholesale contracts surged to more than $3 per million British thermal units for the first time in 16 months as unseasonably warm weather drove generators to burn more of the fuel than ever for this time of year. The late-summer surge comes as more of the fuel is being burned to make up for lost power supplies while nuclear reactors and other plants shut for seasonal refueling and maintenance.

The natural gas market is staging a dramatic comeback from March, when prices hit a 17-year low after a mild winter failed to stoke strong heating demand. America’s shale gas producers have scaled back drilling to reduce expenses, while blazing July and August heat helped trim a supply glut by spurring record consumption from power plants.

Natural gas for October delivery surged 11.3 cents, or 3.9 percent, to $3.047 per million British thermal units on the New York Mercantile Exchange, the highest settlement since January 2015. They’re up about 30 percent this year. Power-plant demand rebounded after tapering last week with milder weather. Gas deliveries to generators rose to 33.8 billion cubic feet for Tuesday, up 28 percent from the same time last year and a record high for the second half of the month, Point Logic Energy data show.

This comes as 23 nuclear units, accounting for about 23 percent of total capacity, are slated to shut for refueling in the three months through November, according to NukeWorker.com. Meanwhile, production in the lower 48 states in September fell 1.8 billion cubic feet per day from a year ago, according to data compiled by Bloomberg. Gas inventories were 9.3 percent above the five-year average as of Sept. 9, compared with 54 percent in April. Temperatures may be mostly above normal in much of the eastern U.S. from Sept. 30 through Oct. 4, according to MDA Weather Services. The high in Washington may be 81 degrees Fahrenheit on Oct. 4, 9 more than average, according to AccuWeather Inc. forecasts.

Recap of last weeks EIA Natural Gas inventory Report.

EIA Natural Gas Storage Report 9-22-16

Working gas in storage was 3,551 Bcf as of Friday, September 16, 2016, according to EIA estimates. This represents a net increase of 52 Bcf from the previous week. Stocks were 140 Bcf higher than last year at this time and 268 Bcf above the five-year average of 3,283 Bcf. At 3,551 Bcf, total working gas is above the five-year historical range.

Analysts expected the report to show U.S. utilities injected a lower-than-usual 52 billion cubic feet of natural gas into storage last week. As of 10:32 ET, natural gas futures were trading lower by 0.8% to $3.034.

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