Natural Gas Season on Pace for Record Refill
Working natural gas in storage is on pace to meet the US Energy Information Administration’s (EIA’s) expectations for a record overall build. The current Short-Term Energy Outlook projects a record build of close to 2,600 billion cubic feet (Bcf) from the beginning of April through the end of October, which would put inventories at 3,431 Bcf at the end of October.
Following an extremely cold winter, storage inventories at the end of the heating season were only 857 Bcf, the lowest level since 2003. Inventories were around 1,000 Bcf less than the five-year (2009–2013) average.
The refill season began slowly in April but quickly ramped up in May. Injections have exceeded five-year average levels each week since then. In the 10 weeks between the week ending April 25 and the week ending July 4, net injections into storage inventories totaled 1.04 trillion cubic feet—the quickest trillion cubic foot increase since 2003. As a result, the gap between current storage and the five-year average narrowed substantially. Currently, inventories are 683 Bcf below the five-year average.
Abundant domestic production and moderate demand for natural gas to generate electricity because of a relatively cool summer have led to this year’s strong injections. Natural gas marketed production has continued to set records as new wells come online in the Marcellus and Eagle Ford shale formations. In the Short-Term Energy Outlook, EIA expects that demand from the electric power sector from April through October will remain flat compared with last year, while natural gas production is about 3 Bcf per day greater this summer compared to last summer. EIA forecasts that the gap between current and five-year average inventory levels will continue to narrow over the rest of the injection season. Continued high levels of production expected through next spring will also help to reduce the need for storage withdrawals over the upcoming winter.
Strength of supply is also reflected in lower natural gas prices. Prices have fallen to a six-month low.
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