EIA Reveals First Gas Injection of the Year

Jonathan Lee, Senior Energy Market Intelligence Manager at ENGIE Insight

What a difference a year makes. After exiting the winter of 2013/2014 with natural gas storage levels at an 11-year low, a strong production season and mild summer allowed the industry to replenish stockpiles at a record pace. Prior to this winter’s withdrawal season, storage was only at a six-year low. As the winter of 2014/2015 progressed, temperatures varied considerably month-to-month and region-by-region, which resulted in inconsistent heating demand and allowed the storage situation to improve further. By early December, the amount of gas in storage was running at a surplus compared to the prior year and only a minor deficit compared to the five-year average. That shift in the supply and demand balance erased concerns over meeting winter heating demand and drove natural gas prices to their lowest level since June 2012.

Traditionally, gas producers inject gas into storage facilities from April through October to meet the peak demand period where gas is withdrawn from November to March. On March 26th, the Energy Information Administration (EIA) reported the first injection of gas into storage this year for the week ending March 20th. Although it’s not uncommon for injections to occur prior to April, it does highlight the continued strength in production and diminished heating demand.

The weekly natural gas storage report highlights a 12 Bcf build, which is a stark contrast to last year’s 56 Bcf withdrawal and the five-year average 19 Bcf draw. The total amount of gas in storage is currently at 1,479 Bcf. This week’s build effectively places the end of withdrawal season low at 1,467 Bcf, nearly 645 Bcf above last year’s low. With supplies outpacing demand, natural gas prices will face continued downward pressure until either demand increases or production slows.

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