Energy Prospectus

Deficit to the 5-year average increases by 11 Bcf.

Working gas in storage was 2,029 Bcf as of Friday, May 7, 2021, according to EIA estimates. This represents a net increase of 71 Bcf from the previous week. Stocks were 378 Bcf less than last year at this time and 72 Bcf below the five-year average of 2,101 Bcf.
At 2,029 Bcf, total working gas is within the five-year historical range.

For the next six weeks the 5-year average builds are 86 to 96 Bcf, so if the weather turns HOT across the South and exports remain high (~18 Bcf per day) we should see the deficit to the 5-year average increase to over 100 Bcf before the end of Q2. If that happens, natural gas prices for Q3 2021 thru Q1 2022 average more than $3.00/MMBtu. At the time of this post the NYMEX futures contracts for JUL21 to MAR22 are all over $3.00. The front month contract, JUN21 is at $2.98.

If we get to the end of Q3 with storage more than 100 Bcf below the 5-year average, we may see strip prices for Q1 2022 go over $3.50. The last time we approached winter with storage below the 5-year average the gas price went over $4.60 in November, 2018. In mid-November, 2018 storage was ~300 Bcf below the 5-year average.

From AEGIS:
"EIA reported a build of 71 Bcf for the week ending 5/07/2021. This was smaller than the median estimate of 73 Bcf. Today's stat fell within the expected range, which was 92 Bcf on the more bearish end, and 68 Bcf on the more bullish end. Prices were up in the five minutes following the announcement, to $2.987, from $2.955 just before 9:30am. Inventories for the US are now at a deficit of 378 Bcf to last year and a deficit of 72 Bcf to the five-year average."

This weeks EIA report is also bullish for NGL prices.