Today's natural gas EIA storage report showed a build of 93 bcf for the week ending 6/5, dead-on our internal storage estimate.
This was 1 bcf lower than the 5-year average build, which makes sense given that last week was on the warm side of normal in terms of national demand.
In terms of supply / demand balances, this was the strongest number we have seen since before the onset of the COVID-19 virus prompted much of the economy to shut down.
Despite the stronger balance, natural gas prices continue gravitating to the middle of the prompt month trading range we've been stuck in since January.
Why is this the case? LNG volumes declined even more this week, showing a roughly 1 bcf/day decline week over week.
This means that the demand side still has to pick up the slack more to compensate for the reduction in LNG. This is possible if more of the economy can successfully open, as industrial demand has not yet returned to pre-COVID levels. A hotter summer would help the bullish cause as well. For the time being, however, the market is "on hold" waiting for a better sense of direction.
Comments
Log in or sign up to join the conversation.