Thursday, January 14, 2010

Gas in Storage: Back in the Band!

OK, so I've used an exclamation point in headlines twice today - probably won't happen again.  But I was excited to see a huge withdrawal in the weekly EIA gas in storage report.  The report showed a 266 Bcf decrease in gas in storage because of the cold weather across much of the country (I certainly used my fair share).  That withdrawal represents 8.5% of the total amount of gas in storage and was greater than some of the estimates I have read this week. 

The resulting working gas in storage at the end of last week was 2.852 Tcf, the lowest it has been since July 3, 2009.  Interestingly, the EIA revised last week's number down by 5 Bcf (resulting in a 158 Bcf, rather than 153 Bcf, withdrawal last week) because of resubmissions of data from respondents in two of the reporting regions.

The weekly withdrawal was significantly larger than last year's change (-88 Bcf) and the five year average (-76 Bcf).  As a result, the EIA weekly graphic showing the weekly storage comparison finally shows the current year red line back inside the five year average gray band. 

The current storage level is only 3.7% greater than last year's storage level and 4.4% greater than the five year average.  Last week, the figures were 10.1% and 11.3%, respectively.

I fooled around with the numbers a bit to see how the past year fits in with the past five years (chart below).  Looking back at last year, we really had mild weather, which resulted in lower than average withdrawals in the winter and no midseason downward spikes in the summer (like 2006 and 2007).  Also, the injection season was longer (old news).  It will be interesting to see how the rest of the winter season plays out.

The cold temperatures on the temperature map for last week show why the gas withdrawal for the week was so high.

[UPDATE: I guess I wasted my exclamation point:  Natural Gas Dips After Supply Report.  The supply report soundly beat analyst estimates - what were traders expecting?]


Anonymous said...

They bet on the ancient record of 274 Bcf. They lost and are disappointed. So they make plunge the price. It is a game for capricious children. Traders are a real danger for the evolution of the natural gas more than the lobby of the coal or what the environmental requirements.

Robert Hutchinson said...

With the 5 Bcf restatement last week, the net change from the previous week's report was 271 Bcf. It's a shame falling 3 Bcf (1.1%) from an arbitrary record could cause such dismay. It's silly.

It is also a shame that the futures market, which really should be used more for risk management than risk taking, has become such a playground for these "capricious children."