The Energy Information Administration (EIA) has reported a rise in natural gas storage for the week ending on April 21, exceeding industry analysts’ expectations for a second consecutive week. The rise, which totalled 79 billion cubic feet (bcf), was largely driven by low heating demand throughout the week.
Surpassing Expectations
Investing.com had projected an injection of 75 bcf for last week, as burning for power generation and heating was tracked by industry analysts. However, the EIA report exceeded those expectations, with the latest weekly injection bumping total gas inventories to 2.009 trillion cubic feet.
Record Highs
This total marks a significant increase from the same time last year, with gas storage standing at 35% above the year-ago level of 1.484 tcf and 22% higher than the five-year average of 1.644 tcf. Energy markets advisor Gelber & Associates said in a note, “This puts the market in a great position for filling storage to the necessary levels for the winter, and should injections continue to be on the heavier side, an end-of-season level of 3.8-3.9 Tcf is more than possible.”
Disappointing Heating Demand
The increase in storage was largely driven by low heating demand throughout the week, with around 62 heating degree days (HDDs) recorded. HDDs measure the number of degrees a day’s average temperature is below 65 degrees Fahrenheit (18 degrees Celsius) to estimate demand to heat homes and businesses.
Looking Ahead
As we move into the summer months, demand for natural gas is likely to decrease, with the EIA forecasting an injection of 31 bcf for the week ending on April 28. This forecast suggests a slowing in the rate of injections and may indicate a tapering off of the recent trend of exceeding industry expectations.
Conclusion
While the rise in natural gas storage may seem concerning at first, it puts the market in a strong position for the upcoming winter months. As we move into the summer season, the trend of exceeding expectations may taper off. Still, the market’s high levels of storage should provide a buffer against any potential supply issues. It is crucial to remain vigilant and closely monitor the natural gas market’s trends as we move into the latter half of the year.
