Natural gas: bullish US inventory numbers

Energy , Natural Gas , USA Mar 29, 2014 No Comments

Natural gasThe price of natural gas increased by 1.6% to 4.48 dollars per million British thermal units (Btu) following the publication of disappointing weekly inventory. According to the EIA, natural gas inventories in the United States have declined by 57 billion cubic feet (bcf) as of Friday, March 21, 2014.

While experts surveyed by Bloomberg had expected a smaller decline of 52 bcf, US inventory was at 896 bcf, its lowest level since 2003. This higher than expected gas consumption reduced available gas and boosted price.

Working gas in storage was 896 Bcf, according to EIA estimates. This represents a net decline of 57 Bcf from the previous week. Stocks were 899 Bcf less than last year at this time and 926 Bcf below the 5-year average of 1,822 Bcf.

In the East Region, stocks were 419 Bcf below the 5-year average following net withdrawals of 39 Bcf. Stocks in the Producing Region were 378 Bcf below the 5-year average of 754 Bcf after a net withdrawal of 15 Bcf. Stocks in the West Region were 129 Bcf below the 5-year average after a net drawdown of 3 Bcf. At 896 Bcf, total working gas is below the 5-year historical range.

Natural gas storage

“Today’s withdrawal will probably be on the healthy side,” said Tom Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami. “The end-of-season inventory number is going to set the scale in terms of the amount of gas we need to put back into storage to have comfortable supplies.”

The five-year average decline for the period is 7 billion. Stockpiles were a record 49.4 percent below the five-year average and 47.9 percent less than the year-earlier total in last week’s report.

“We’re going to see another withdrawal that’s bigger than the five-year average,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “Traders are focused on how fast we can close the record deficits to last year and the five-year average.”

Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

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