The latest from Celsius on yesterday's EIA NG Report: Enjoy 6:00 AM EDT, Friday, August 6, 2021
In its weekly Natural Gas Storage Report for July 24-30, the EIA announced yesterday morning that inventories rose by +13 BCF. This was 6 BCF smaller than my projection and a strong 17 BCF bullish versus the 5-year average. It was also the smallest weekly injection of the season, just edging out the +16 BCF injection from the week ending July 2. With the build, natural gas inventories to 2727 BCF while the storage deficit versus the 5-year average widened to -185 BCF. Storage levels are -538 BCF smaller than last year’s build.
Based on the latest inventories, forecast temperatures, and supply/demand imbalance, I am now projecting that natural gas inventories will peak the week of November 5 at 3369 BCF. This would be a strong -368 BCF bullish versus the 5-year average and would undoubtedly increase investor anxiety about low inventories heading into the heating season. Such a peak inventory level would be the second lowest in the last 5 years, ahead only of 2018’s 3247 BCF. It is also back to within 50 BCF of my seasonal low projection of 3315 BCF issued back on May 13. It is certainly possible that production finally starts to ramp up as we approach the Fall shoulder season, loosening the supply/demand imbalance, proving this projection a bit ambitious. However, I feel that anything under 3500 BCF will prove to be quite bullish heading into the Winter.
The bullishness of the EIA’s number was driven largely by the South Central Region which saw a steep -23 BCF withdrawal, 16 BCF bullish all on its own versus the 5-year average -7 BCF. The remaining storage regions saw injections or withdrawals at or bullish versus their 5-year averages, with the exception of the cool East Region, which saw a +21 BCF injection, 2 BCF above its regional average. Importantly, with the Mountain Region’s bullish +0 BCF flat inventories, inventories of all of the storage regions are at or bullish versus their respective 5-year averages for the first time since February. The South Central continues to have the most bullish deficit versus both the 5-year average (-77 BCF) and the South Central (-237 BCF).