From the Chicago Mercantile Exchange:
Today's Nat Gas inventory report was bullish by all measurements as the total inventory level is now at the lowest level versus the normal five year average since September of 2011. The absolute inventory level is now down to where it was in April of 2011. The reaction in the market has been minimal with the spot futures contracting trading either side of unchanged since the data has been released. The fact that the report was bullish has not been enough to send prices significantly higher as the market has been expecting a bullish report for over a week. We are seeing a bit of buy the rumor and sell the fact type of a trading pattern. Many market participants are moving their focus away from the Nat Gas heating related demand to the arrival of a warm weather starting to work its way across the US this week. The lower demand shoulder season is finally getting underway.
As I have been discussing in the newsletter I am expecting the market to enter into a trading range of $3.75/mmbtu on the low end to about $4.02-$4.05/mmbtu on the high end for the remainder of the shoulder season and once this week's inventory data has been fully digested.
Today's EIA report was simply bullish across the board. The report showed a net withdrawal that was above the market expectations and above both last year and the five year average net injection for the same period. The 94 BCF withdrawal (strongly atypical for this time of the year) was above the market consensus calling for a withdrawal of around 91 BCF. The draw of 94 BCF was greater than my model forecast (-65 BCF withdrawal) this week. The year over year inventory situation remains in a strong deficit position versus last year and has widened this week while the surplus versus the more normal five year average is now gone and showing a deficit. The current inventory deficit came in at 38 BCF versus the normal five year average or about a negative 2.1 percent.
This week's 94 BCF withdrawal compares to a 42 BCF injection into inventory last year (a warmer than normal period) and an injection for the five year average of 4 BCF for the same week.
Working gas in storage was 1,687 Bcf as of Friday, March 29, 2013, according to EIA estimates. This represents a net decline of 94 Bcf from the previous week. Stocks were 779 Bcf less than last year at this time and 37 Bcf below the 5-year average of 1,724 Bcf. In the East Region, stocks were 76 Bcf below the 5-year average following net withdrawals of 48 Bcf. Stocks in the Producing Region were 29 Bcf below the 5-year average of 724 Bcf after a net withdrawal of 42 Bcf. Stocks in the West Region were 67 Bcf above the 5-year average after a net drawdown of 4 Bcf. At 1,687 Bcf, total working gas is within the 5-year historical range.
The following chart shows the difference between current total Nat Gas inventories compared to last year and the five year average. The direction has resulted in the elimination of the surplus of Nat Gas in inventory that has persisted in the market for over a year. The current inventory level is well below last year at this time and now below the five year average. Compared to last year total inventories are now showing a deficit of 778 BCF or -31.6 percent below last year and only 2.1 percent below the more normal five year average.
As shown in the following table total inventories are now at 39.8 percent of maximum workable storage capacity with the Consuming East region at 29.8 percent of maximum. This compares to storage sitting at 58.1 percent of capacity last year at this time. There is certainly not going to be any capacity this year during the injection season as inventories will actually be starting the injection season at a below normal level....MORE
