With the end of summer heat and milder temperatures across the U.S., the Energy Information Administration’s reports a clear boost to natural gas inventory. Recent weekly reports show stocks growing by over 100 billion cubic feet (Bcf) per day, helping to narrow the gap ahead of the winter season.

In the latest weekly report, inventories of natural gas climbed 125 Bcf, with all regions showing some increase. This brings our total working gas in underground storage to 3,231 Bcf, down 3.8 percent from the first week of October 2021 and down 6.4 percent from the longer-term average. Milder weather and the still-offline Freeport, TX facility seem to have supported stock-building. Importantly, inventories are still below the historical trend, and once the buildup ends, stocks will continue to decline until late spring 2023.

Despite the recent good news, time is quickly running out for operators to inject gas into storage before the mercury starts to drop: Once colder temperatures arrive in November, we normally turn the trend of the seasonal inventory curve. Buyers should also remember that the startup of the Freeport facility will also see more gas leaving in LNG vessels for European ports.

September CPI numbers showed continued inflationary pressure on the economy and no overwhelming reason for the Fed to pivot and stop raising rates. Under-covered buyers would do well to take advantage of the 35 percent drop in natural gas prices since late summer and extend positions ahead of colder weather and any potential escalation by Putin in the ongoing war in Ukraine. Good long-term technical support in this market may be near the $6.50 per mmBTU, which funds will likely support.

Working gas in underground storage

Source: EIA
Posted by: Information Services
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