My Sweet Hoard – How Natural Gas Production Trumped Storage Withdrawal This Winter
At yesterday’s close (April 28, 2015) the CME NYMEX Henry Hub natural gas futures strip (average) for the nearby 12 months was $2.794/MMBtu. That was only slightly above Monday’s three year low for the strip. The price weakness has been brought on by concern about a growing storage surplus. Last week the Energy Information Administration (EIA) last week reported that U.S. natural gas storage as of April 17 was 737 Bcf, or 83%, higher than this time last year. Within a year, the gas market has gone from the biggest storage deficit and lowest inventory since 2003 at the end of March 2014, to a massive year-over-year surplus and the possibility of a record-high inventory by the end of injection season. In today’s blog, we look at how inventories got here and implications for the summer gas market.
