EIA Natural Gas Storage Report - June 6

[dan_s]

Working gas in storage was 2,893 Bcf as of Friday, May 31, 2024, according to EIA estimates.
This represents a net increase of 98 Bcf from the previous week.
Stocks were 373 Bcf higher than last year at this time and 581 Bcf above the five-year average of 2,312 Bcf.
At 2,893 Bcf, total working gas is above the five-year historical range.

The 98 Bcf increase is 5 Bcf below the 5-year average, but much larger than I was expecting. This is the 6th week in a row that the increase has been lower than the 5-year average.

The U.S. natural gas market is slowly rebalancing, but it will take a HOT summer and more LNG exports to get back to the 5-year average. Keep in mind that demand for U.S. natural gas is much higher than it was 5 years ago, so a higher storage level is justified.

The JAN25 NYMEX contract is currently trading at $3.91 and DEC25 is trading at $4.25.

I have raised the HH natural gas prices used in my forecast models to:
2024
$2.25 for Q2
$2.50 for Q3
$3.00 for Q4
$3.50 average for 2025

I do think there is a lot of upside for U.S. natural gas prices, but I think the current front month (JUL24) price of $2.79 is a bit ahead of where it should be. That said, 2H 2024 is looking MUCH BETTER for all of the gassers than how it looked at the end of March.

An active hurricane season in the Gulf of Mexico could have a big impact on the U.S. ngas price.

I have lowered the oil prices used in my forecast, but I'm still higher than the strip because I think the recent pullback in WTI has been overdone. I think WTI will move back over $80 this summer. OPEC will extend all production quotas if necessary to support oil prices, even the ones that they say they might unwind starting in October.