Who knew Dr. Jekyll traded gas?
Yesterday’s (Wednesday's) EIA report effectively wraps up what has been a rather Jekyll and Hyde refill season. According to the monthly numbers from the EIA, underground stores of working gas increased by a staggering 1.079 Tcf through the first phase (April to June) of this season. Based on the variation in the time series we have seen since the start of the decade, we would have expected an injection of no more than 1.064 Tcf. As such, the industry entered the dog days of summer in a very comfortable position.
In hindsight, that was extraordinarily fortunate, given record cooling demand in July and August. To wit, injections mirrored the great start to the season. Through the second phase injections totaled only 409.24 Bcf as temperatures soared.
Again, based on the metrics since the start of the decade we would have been comfortable with an injection of anywhere from 683.23 down to 448.62 Bcf. We instead received 39.4 fewer Bcf.
This is when gas bulls had a seemingly great opportunity.
After all, implied cooling demand spiked in May and lasted through September, yet spot Nymex gas peaked in mid-June at 5.196 and then plunged 26% (with rolls) through the end of the summer. We saw the exact same movie last winter when heating demand surged to record levels and yet spot gas peaked in the first week of January and then plunged 38% through the end of the season.