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The August natural gas contract was higher yesterday once again with the hotter temperatures forecasted for the next 6 to 10 days as the August wholesale natural gas rallied higher by $0.07 settling at $4.403 on the day. In continuing with hotter temperatures, this significant heat wave will begin this weekend in the Plains and Midwest then spread to the East and Northeast next week and also some of the weather computer models are showing what could be record-challenging high temperatures during this period. On the EIA storage this morning, the big news today are the current estimates for the EIA storage change number with Bentek calling for a build of 78 bcf, the BNP Paribas survey calling for a build of 80 bcf, PIRA calling for a build of 85 bcf and Reuter’s below calling for a storage build of 76bcf.. Last year at this time we saw a build of 78 bcf. We believe with these projections, the trend could sustain itself higher unless we see a build above 90 bcf.
As we do on every Thursday, we’ll focus the rest of the commentary on the storage levels. U.S. natural gas inventories were expected to have gained 76 billion cubic feet last week, a Reuter’s poll of industry traders and analysts showed on Wednesday. There were 26 participants in the Reuters poll, with injection estimates ranging from 50 bcf to 89 bcf. Storage rose an adjusted 78 bcf for the same week last year. The five-year average build for that week is 88 bcf. In last week's report, for the week ended July 1, overall storage climbed 95 bcf to 2,527 trillion cubic feet, well above the Reuters estimate of 80 bcf, the year-ago rise of 76 bcf and the five-year average gain for that week of 80 bcf. The build trimmed the inventory shortfall relative to last year by 19 bcf to 224 bcf, or 8 percent, and left stocks 48 bcf, or 2 percent, below the five-year average. It was the third straight week that the inventory gap to year-ago narrowed.
A total build this morning at the Reuters survey estimate would widen the shortfall relative to last year by 2 bcf to 226 bcf, or 8 percent, and increase the deficit to the five-year average by 12 bcf to 60 bcf, or 2.3 percent. In the past four reports, total stocks rose 340 bcf or 85 bcf per week, versus a 309 bcf adjusted build for the same one-month period last year and a 330-bcf five-year average gain for that period. Early injection estimates for next week's EIA report range from 45 bcf to 65 bcf versus a year-ago build of 55 bcf and a five-year average increase for that week of 67 bcf. Storage ended March with 1.585 tcf in the ground, or about 1 percent below the five-year average, after a cold winter trimmed stocks from an all-time high of 3.84 tcf in early November.
If weekly stock builds through October match the five-year average pace, inventories will begin next heating season with 3.555 tcf, about 7.4 percent below last November's record and 1.3 percent below average for that time of year. To get inventories above last year's record high by Nov. 1, weekly injections must average 73 bcf for the remaining 18 weeks of the stock building season, well above the five-year average of 57 bcf for that period.
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