NatGas: The Wild Wild West...
Yesterday (Thursday), the EIA reported a reasonable 73 Bcf injection into natural gas storage. Analysts were looking for an 80 Bcf injection and the previous report saw a 103 Bcf injection, yet prices sold off in the minutes after the report. Why?
We believe traders did not find the report to be earth-shaking: prices were soon off their lows and settled the day higher, possibly on reports of a tropical storm brewing close to the Gulf of Mexico (GoM) (although Matt Rogers of Commodity Weather Group described risk to the Gulf as “Still low” as of Thursday morning).
The number itself is well within seasonal norms, our historic trend was a 79 ± 5 Bcf injection and the 2004-08 average is 72 Bcf. Bloomberg’s Whisper Number, which often proves to be more accurate than the analyst data due to the sheer number of submissions, was remarkably close at 74 Bcf.
On the regional breakdown, we are not surprised that prices fell in the minutes after the report — the East and GoM producing regions saw injections above last year while the West Coast’s 1Bcf injection suggests that throttling (or a “Sustained Operation Condition,” as it is euphemistically known) remains in place.