Working gas in storage was 2,203 Bcf as of Friday, June 14, 2019, according to EIA estimates. This represents a net increase of 115 Bcf from the previous week.
Stocks were 209 Bcf higher than last year at this time and 199 Bcf below the five-year average of 2,402 Bcf.
At 2,203 Bcf, total working gas is within the five-year historical range.
The U.S. needs ~3,800 BCF in storage by mid-November to safely make it through a cold winter.
We've now seen 14 weeks in a row where the increase in storage has exceeded the 5-year average. During that time, the delta to the 5-year average has declined by 432 BCF.
EiA - Weekly Natural Gas Storage Report - June 20
EiA - Weekly Natural Gas Storage Report - June 20
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: EiA - Weekly Natural Gas Storage Report - June 20
TPH comments below:
Negative momentum continues to accumulate for the natural gas macro, as yesterday's reported 115bcf build (5-yr avg 86bcf) surpassed consensus of 106bcf (TPHe 108) and implies the market is ~3bcfd oversupplied on a weather adjusted basis. Every injection so far this year (11 weeks and counting) has come in above the 5-year avg, adding an incremental ~340bcf to storage relative to 5-yr norms. Storage levels now sit at 2.2tcf, 8% below the 5-year avg and 11% above year ago levels. On the LNG front, Corpus Christi feed gas volumes hit a record 1.3bcfd this week, potentially related to commissioning of Train 2. However, volumes at Cameron have been soft since the initial commissioning cargo, with speculation of mechanical issues beginning to emerge. In a sea of negative data points, one small positive for the macro this week is the force majeure on the 2bcfd Alliance pipeline that delivers Canadian gas into the Midwest. The 4-day complete shut-down has reduced net imports from Canada by ~1bcfd, and will shave 4bcf off next week's storage print. Our early estimate for next week is a 102bcf build, relative to the 5-yr avg of 71bcf.
Gas Macro Sending Producers a Message
Conversations to date suggest upstream operators are still hoping for a pricing recovery to maintain activity levels into 2020, however, pressure on the liquids market and a continued compression of the natural gas forward curve should pressure budgets and growth, in our opinion. The pricing pain has still largely been confined to H2'19, however, strip 2020 has fallen to $2.51 from $2.70 a month ago, but ultimately the forward curve may need to average between $2.25 and $2.50 before operators go ex-growth. In our view, the sooner companies move this direction the more likely the equities may find support, as fundamentals will continue to deteriorate under status quo growth plans. We estimate a move to maintenance capex in gassy basins (Appalachia and Haynesville) would require activity levels to be reduced by ~30%, or ~35-40 horizontal rigs and ~20-25 frac spreads.
Negative momentum continues to accumulate for the natural gas macro, as yesterday's reported 115bcf build (5-yr avg 86bcf) surpassed consensus of 106bcf (TPHe 108) and implies the market is ~3bcfd oversupplied on a weather adjusted basis. Every injection so far this year (11 weeks and counting) has come in above the 5-year avg, adding an incremental ~340bcf to storage relative to 5-yr norms. Storage levels now sit at 2.2tcf, 8% below the 5-year avg and 11% above year ago levels. On the LNG front, Corpus Christi feed gas volumes hit a record 1.3bcfd this week, potentially related to commissioning of Train 2. However, volumes at Cameron have been soft since the initial commissioning cargo, with speculation of mechanical issues beginning to emerge. In a sea of negative data points, one small positive for the macro this week is the force majeure on the 2bcfd Alliance pipeline that delivers Canadian gas into the Midwest. The 4-day complete shut-down has reduced net imports from Canada by ~1bcfd, and will shave 4bcf off next week's storage print. Our early estimate for next week is a 102bcf build, relative to the 5-yr avg of 71bcf.
Gas Macro Sending Producers a Message
Conversations to date suggest upstream operators are still hoping for a pricing recovery to maintain activity levels into 2020, however, pressure on the liquids market and a continued compression of the natural gas forward curve should pressure budgets and growth, in our opinion. The pricing pain has still largely been confined to H2'19, however, strip 2020 has fallen to $2.51 from $2.70 a month ago, but ultimately the forward curve may need to average between $2.25 and $2.50 before operators go ex-growth. In our view, the sooner companies move this direction the more likely the equities may find support, as fundamentals will continue to deteriorate under status quo growth plans. We estimate a move to maintenance capex in gassy basins (Appalachia and Haynesville) would require activity levels to be reduced by ~30%, or ~35-40 horizontal rigs and ~20-25 frac spreads.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group