Key Takeaways:
- EIA reported a 92 Bcf storage injection, below the 96 Bcf consensus estimate.
- The surplus over the five-year average narrowed to 144 Bcf from 149 Bcf.
- NYMEX natural gas July futures surged 6.1% to settle at $3.285/mmBtu.
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Natural gas storage misses estimates as futures jump 6.1%
U.S. natural gas inventories rose 92 Bcf last week, below the 96 Bcf consensus estimate, as the July contract surged 6.1% to $3.285/mmBtu on the data miss.
"The market's strong response to a seemingly small miss attests to a sensitivity to even minor supportive headlines," Ritterbusch & Associates said in a note, adding that price moves are accentuated by bullish trader positioning.
The injection compared with the 97 Bcf five-year average and the 104 Bcf build a year earlier. Total working gas stood at 2,483 Bcf as of May 22, 6.2% above the 2021-2025 average of 2,339 Bcf and 21 Bcf above year-ago levels. The surplus over the five-year average narrowed to 144 Bcf from 149 Bcf the prior week, according to EIA estimates.
The smaller-than-expected build signals tightening supply-demand dynamics heading into summer cooling season, when power demand typically peaks in the southern U.S. Texas wind generation is expected to reach a low point, which could bring additional hourly volatility to power markets, said Gary Cunningham at Tradition Energy.
All five storage regions posted net injections for the week. The Midwest led with a 34 Bcf increase, followed by the East at 28 Bcf and the South Central at 21 Bcf. The Mountain region added 3 Bcf and the Pacific added 6 Bcf. South Central salt storage rose 7 Bcf while nonsalt facilities added 15 Bcf.
The July contract, which debuted at the front of the curve this week, settled at $3.285/mmBtu after trading as low as $3.070/mmBtu in early trading before the report. The 6.1% gain marked the largest single-day advance for the front-month contract in several weeks.
The EIA data showed total storage remains within the five-year historical range, though the narrowing surplus suggests the market is absorbing supply at a faster pace than the seasonal norm. With cooling demand expected to accelerate into June, traders will watch next week's injection data for confirmation of the tightening trend.
This article is for informational purposes only and does not constitute investment advice.
