May 7, 2018 – Natural Gas Intelligence
Storage Still in Focus as Natural Gas Futures Rebound; Western Spot Prices Strengthen
By Jeremiah Shelor
Natural gas futures rebounded Monday after trading on both sides of even, with the market continuing to weigh production growth against storage deficits as May forecasts hint at cooling demand potential..…
Read the full article here: http://www.naturalgasintel.com/articles/114298-storage-still-in-focus-as-natural-gas-futures-rebound-western-spot-prices-strengthen
… Despite overall natural gas supply coming in nearly 8.0 Bcf/d higher year/year (y/y) during April, the market entered the month of May about 7 Bcf/d tighter, RBN Energy LLC analyst Sheetal Nasta said in a recent note to clients.
“The problem is that the bulk of the incremental demand has been attributable to cold weather, which is a fading prospect at this point,” Nasta said. “...What’s not going to go away, however, is the mountain of gas production that’s been introduced into the market since last year at this time.”
Assuming April 2018 production levels continue through October and imports remain flat y/y, the market would have about 5.9 Bcf/d more supply for the upcoming injection season. On the demand side, assuming flat consumption y/y from the residential/commercial, industrial and power sectors, growth in exports would soak up about 2.0 Bcf/d of the incremental supply growth, according to Nasta.
“That brings us to the final step in the calculation,” Nasta said. “If we take last year’s 8.25 Bcf/d average injection rate for the May-October period and add another 3.9 Bcf/d, that’s an average injection of about 12 Bcf/d.” Estimating 184 days for injections from May through October, “that comes to a total injection of around 2,200 Bcf...add that to the baseline inventory of 1,334 Bcf and you end up with just over 3,500 Bcf in storage by late October/early November” versus inventories well above 3,700 Bcf last year…
