In Monday's Chart of the Day, we plotted the return on holding underground inventories of natural gas, as measured by the front-month on the Nymex (y axis). In this example, demand is inferred from the trendline running through this scatter plot of the spread and EIA estimated storage (x-axis). When the scatter point lies above the trendline, as is the current case, it is understood that demand for inventory is above normal. This event likely correlates to this incongruous refill-season.
Injections in the first phase of the season averaged 11.9 Bcf/d or 10.9% above the average of the previous nine seasons. As a result, the overall surplus at the end of June was 21½% or 485 Bcf… and that was inclusive of the 8th warmest June in the U.S. on record.
However, injections through the second phase of the season, i.e., the dog days of July and August were around 38% below the 2001-2009 average. A 21½% surplus that existed in June narrowed to 9.6% in August (according to preliminary estimates for July and August) as a result.
The last phase of the season now takes us through the peak hurricane season in September and October. Average injections rebound to 10.6 ±0.5 Bcf/d in September as temperatures cool and then fall to 6.6 ±0.8
Bcf/d in October as utilities top off storage ahead of the winter. In this vein, this phase is getting off to a very strong start, 12.6 Bcf/d through the first two reports.