Bullish EIA Report Pushes Gas Prices Near $2.80 Mark

Bullish EIA Report Pushes Gas Prices Near $2.80 Mark

Natural gas storage inventories increased by 89 Bcf for the week ending May 4, according to the EIA’s weekly report. The report is bullish as the injection was smaller than most market expectations, which were in the mid-90 Bcf. Prompt month (June 2018) is up $0.06 MMBtu following the EIA report at $2.795 at the time of writing.

See the chart below for projections of the end-of-season storage inventories as of November 1, the end of the injection season.

This Week in Fundamentals

The summary below is based on PointLogic’s flow data and DI analysis for the week ending May 10, 2018.

  • Supply:
    • Dry gas production is down 0.5 Bcf/d with losses across multiple regions: Midcontinent (-0.2), Texas (-0.18), Rockies (-0.1), Northeast (-0.06) and Offshore (-0.04).
    • Canadian imports are also down 0.08 Bcf/d week-on-week.
  • Demand:
    • Domestic natural gas demand dropped 0.8 Bcf/d on milder temperatures.
    • LNG exports are down 0.42 Bcf/d, while Mexico exports are up 0.11 Bcf/d week-on-week.
  • Total supply is down 0.6 Bcf/d and total demand is down 0.94 Bcf/d week-over-week. Expect a slightly larger injection in next week’s EIA report.

As mentioned in Monday’s Market Bulletin, storage injections will need to average over 90 Bcf every week for the remainder of the injection season for inventories to end October at last year’s levels. The next two weeks’ projections show injections in the 90-100 Bcf range, leading the market to wonder whether production growth can meet the injection requirements.

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