The Energy Information Administration (EIA) reported this morning that natural gas in storage totaled 3,576 Bcf, representing an injection rate of 80 Bcf versus last week's storage level of 3,496 Bcf. This compares to the 5-year average of 3,354 Bcf and an injection rate of 83 Bcf. The street was looking for an injection of 76 Bcf. I have updated the historical differential between current storage levels and the five-year average below.
The differential between current storage levels and the five-year average appear to be moderating, as the 12 week slope of the storage level differential has turned upward.
The differential between current storage levels and the five-year average appear to be moderating, as the 12 week slope of the storage level differential has turned upward.
Although I will not know conclusively for some time, as the consumption and production figures are only posted with a lag by the EIA, it is my belief that the reasoning behind the rate of decline is largely due to a reduction in demand. The demand for natural gas has likely slowed with the moderation in the late Summer/early Fall temperatures amongst the backdrop of slow economic growth. Barring a return to more normal winter weather patterns and if this trend persists, it will be difficult for natural gas storage levels to achieve parity with the running average.
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