Injection within expectations
Nat Gas futures have been under selling pressure throughout most of today's session so far. That said the market is now trading off of its intraday lows since the EIA inventory report has been released. The injection report showed an injection of 20 BCF which was within the area of industry projections (see below for a more detailed discussion on inventories).Earlier Energy Metro Desk had called for injections of 30 Bcf:
So far the spot Nymex Nat Gas contract has been holding the $3.50/mmbtu support level after dropping below this area for a short period of time earlier today. The market is being pulled from both ends. The current cold snap along major portions of the US has been providing a bullish overtone for the market. However, on the other side of the equation is the moderating of temperatures expected by the weekend and projected to remain less supportive for an above normal level of heating related Nat Gas demand for the next several weeks.
The market is currently settling in around the lower area of the current $3.50 to $3.64/mmbtu trading range and will likely trade very cautiously as market participants continue to focus on the daily weather updates. As it stands at the moment Nat Gas inventories are very close to last year's record high level heading into the heart of the winter heating season.
Today's EIA report was neutral versus the market consensus and compared to the so called normal five year average but bearish versus last year. The report showed a net injection that was around the market consensus (20 versus 21), but greater than last year and around the same level as the five year average net injection for the same period. The 20 BCF injection (around normal for this time of the year) was about 1 BCF below the market consensus calling for an injection of around 21 BCF. The build of 20 BCF was below my model forecast (25 BCF injection) this week. The year over year inventory situation remains in a deficit position versus last year and is still in a modest surplus position versus the so called normal five year average. The current inventory surplus came in at 58 BCF versus the normal five year average or about a positive 1.5 percent.
This week's 20 BCF injection compares to a 12 BCF withdrawal into inventory last year and an injection for the five year average of 19 BCF for the same week....MORE
Previewing the Energy Information Administration's 11/07/13 report.
Each
week, we poll 40 professional storage forecasts for our weekly
Natural-Gas Storage Box Scores (as seen in each bi-weekly issue of
Energy Metro Desk*). This is North America's biggest and most
comprehensive natural-gas storage survey and report.
Average: +35.5 Bcf
Median: +36 Bcf
Range: +27 to 44 Bcf
Editors Forecast This Week: +30 Bcf
Natural Gas Storage Tealeaves for 11/07/13
Last
week's final numbers look an awful lot like this week but we have a
sneaking suspicion that the bias this time is looking South, not North.
Our consensus survey came in below most of the big surveys at 35.5 Bcf,
but only by a hair. The average forecast among the six major surveys we
track was 36.3 Bcf. This week the spread between the three forecasts we
track was low at 1.6 Bcf, and the range this week between the 40
analysts, models and surveys we track was inside the 20 Bcf band. For
all intents and purposes, we shouldn't see a surprise this week out of
EIA, but, we still see the bias pointing to a number lower than our
consensus. We're anticipating three more builds this season before the
switch moves to the draw side. Do we still think a new record will be
made this year? Not so much, but it will be close for sure. The weather
picture looks more fickle than usual, so, we're told there is still a
chance for a new end of season tally- high. And given that many Eastern
LDC's are following a pre-determined, end-of-October, end-to-the
traditional-fill-season -- regardless of what the thermometer might
suggest -- injections will be much curtailed going forward. Next week's
VERY Early View is 25 to 39 Bcf at the moment; we think those numbers
may go up slightly before the ides of next week; kind of the opposite of
this past week.-- the editor
Weather Tealeaves
Forecast Courtesy of Meteorologist Steve Gregory
Thought of the Day: Fast and Furious
Fast
moving weather systems dominate the North American weather pattern,
with fairly strong storm and associated frontal systems crossing the
nation every 5-7 days. Temperatures warm to above normal levels in the
high demand regions ahead of each storm system, and then fall off to
near or slightly below normal levels for a day or two following the
passage of each storm and associated cold front. Beyond 1 week, the
models have begun to exhibit a larger variation in solutions between
model runs, indicative of an unstable set of model solutions which
lowers the overall confidence level for the forecast weather pattern
beyond the middle of the month. That said - trends continue to point to
at least modestly above normal temps in the main demand regions thru the
3rd week of the month - though stormy conditions are likely to continue
keeping daytime heating demand at or even slightly above normal. Net
nationwide demand is expected to average 3%-7% below normal for the next
2 weeks.
Notes of Note:
Last week's weather was 5% warmer than same week/last year and the 5-year average;
Since September, weather has been 9% warmer than last year and 10% warmer than the 5-year average;
**Total outages were down 2 GW W-o-W to 70 GW.
**Nuclear outages were down 3 GW w-o-w to 15 GW.
**Coal outages were up 1 GW w-o-w to 46 GW.
**Total outages were down 16 GW compared to year ago levels mainly due to decreased nuclear outages Y-o-Y;
**Total demand increased 0.2 Bcf/d W-o-W and was 0.3 Bcf/d lower than 2012 levels;
**Industrial demand:19.7 Bcf/d, -0.3 Bcf/d W-o-W, -0.2 Y-o-Y;
**Res/comm: 24.1 Bcf/d, +0.5 Bcf/d W-o-W, -0.2 Bcf/d Y-o-Y;
**Power demand: 19.7 Bcf/d, -0.2 Bcf/d W-o-W, -0.3 Bcf/d Y-o-Y;
**Nuclear generation: 83.8 GW, +3.2 GW W-o-W, +9.3 GW Y-o-Y;
**BPA hydro output:144.6 GWh, -9.3 GWh W-o-W,-12.3 GWh Y-o-Y;
**CAISO hydro output: 34.2 GWh,-1.0 GWh W-o-W,-2.3 GWh Y-o-Y;
**ERCOT wind output:105.4 GWh, +32.9 GWh W-o-W,+47.4 GWh Y-o-Y;
**BPA wind output: 32.3 GWh, +31.5 GWh W-o-W, +12.8 GWh Y-o-Y;
**Total supply increased 0.2 Bcf/d W-o-W and was 0.6 Bcf/d higher than 2012 levels
**Dry gas production: 66.2 Bcf/d, +0.5 Bcf/d W-o-W, +1.1 Bcf/d Y-o-Y;
**Net Imports: 3.4 Bcf/d, -0.5 Bcf/d W-o-W, -0.6 Bcf/d Y-o-Y;
**Market positioning and pricing
