The natural gas market was very quiet again yesterday with very light volume and a 6 cent range between the high and low price of the day. The natural gas wholesale contracts gained for the fourth time in five days in New York as forecasts of warmer-than-normal weather signaled stronger demand. Wholesale exchange contracts advanced 0.4 percent after forecasters including MDA EarthSat predicted above-normal temperatures in the Northeast and South from May 23 through May 27 while natural gas prices dropped Tuesday on a report showing U.S. industrial production unexpectedly stalled in April. Estimates for tomorrow’s EIA storage change number are PIRA calling for a build of 87 bcf, the BNP Paribas survey and Reuter’s (see below) calling for a build of 90 bcf and Bentek calling for a build of 91 bcf. Last year at this time we saw a build of 78 bcf. The 6 to 10 day forecast is now calling for above to much above average temperatures for the entire eastern seaboard and into the Ohio Valley and the Deep South. Being that the 6 to 10 day period is almost at the end of May, these temperatures may be high enough to warrant some air conditioning.
As we do on most Thursday’s, we’ll focus on the storage levels on the rest of the commentary. U.S. natural gas inventories were forecast to have risen 90 billion cubic feet last week, a Reuter’s poll of industry traders and analysts showed on Wednesday. There were 25 participants in the Reuters poll, with injection estimates ranging from 83 bcf to 100 bcf. Storage rose an adjusted 78 bcf for the same week last year. The five-year average build for that week is 91 bcf. The median build in the survey was 90 bcf.
In last week's report, for the week ended May 6, overall storage rose 70 bcf to 1.827 trillion cubic feet, just shy of the Reuters poll estimate of 71 bcf but well below the year-ago increase of 93 bcf and the five-year average of 90 bcf. The build widened the inventory shortfall relative to last year by 23 bcf to 249 bcf, or 12 percent, and left stocks 37 bcf, or 2 percent, below the five-year average. A total build this morning at the Reuters survey estimate would narrow the shortfall relative to year-ago by 12 bcf to 237 bcf, or 11 percent, but leave the deficit to the five-year average nearly unchanged at 38 bcf, or about 2 percent.
In the past four reports, total stocks rose 220 bcf, or 55 bcf per week, versus a 332 bcf adjusted build for the same one-month period last year and a 267-bcf five-year average gain for that period. Early injection estimates for next week's EIA report range from 88 bcf to 101 bcf versus a year-ago build of 100 bcf and a five-year average gain for that week of 95 bcf. Inventories hit an all-time high of 3.84 tcf in early November, but fell about 2.25 tcf during a cold heating season. That was nearly 300 bcf, or 15 percent, more than the five-year average draw for that period, and it left stocks at near normal levels of 1.585 tcf at the start of the stock building season. If weekly stock builds through October match the five-year average pace, inventories will begin next heating season with about 3.566 tcf in the ground, about 7 percent below last November's record of 3.84 tcf but about average for that time. The EIA expects storage injections this stock-building season to total 2.29 tcf, the largest seasonal build since 2003. That would drive domestic inventories to an all-time high near 3.87 tcf by next winter.