Natural Gas Faces Harvey Threat, Even As Surplus Shrinks

The U.S. Energy Department's weekly inventory release showed a below-average increase in natural gas supplies following which the commodity traded up. However, worries over the fuel’s tepid demand on the back of Tropical Storm Harvey-related power outages are expected to keep natural gas prices in check.

About the Weekly Natural Gas Storage Report

The Weekly Natural Gas Storage Report – brought out by the Energy Information Administration (EIA) every Thursday since 2002 – includes updates on natural gas market prices, the latest storage level estimates, recent weather data and other market activities or events.

The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of natural gas. It is an indicator of current gas prices and volatility that affect businesses of natural gas-weighted companies and related support plays.

Analysis of the Data: Below Average Rise in Storage

Stockpiles held in underground storage in the lower 48 states rose by 30 billion cubic feet (Bcf) for the week ended Aug 25, 2017, slightly above the guidance (of 29 Bcf gain) as per the analysts surveyed by S&P Global Platts, a leading independent commodities and energy data provider.

However, the increase was lower than both last year’s addition of 46 Bcf and the 5-year (2012-2016) average net injection of 67 Bcf for the reported week. This caused the current storage level – at 3.155 trillion cubic feet (Tcf) – narrow its surplus to the five-year average to just 8 Bcf (0.3%), while stocks have now fallen 239 Bcf (7%) below the year-ago figure.

The largely supportive data prompted natural gas prices to climb 10.1 cents (or 3.4%) to $3.04 per MMBtu on Thursday.

Fundamentally speaking, supply fell 1.9% on a weekly basis to 77.2 Bcf per day, while daily natural gas consumption declined 10.4% to 67.4 Bcf. The steep decrease in demand was triggered by sharply lower power burn. Meanwhile, Mexican gas exports were down some 11.4% as Hurricane Harvey hampered pipeline shipments.

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Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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