After a notoriously harsh winter that drained natural gas storage inventories, stocks are still hovering below the five-year average, according to the U.S. Energy Information Administration.
“The punch line is that this isn't unexpected,” said Joe Gregorini, vice president of rates and regulatory affairs at Peoples Natural Gas in Pittsburgh. “We came out of one of the coldest winters in 20 years.”
Meanwhile, the amount of natural gas put into storage — the bank for utilities to make withdrawals from in the winter — has seen triple digit figures each week for the last eight weeks. Last week broke that streak, but not by much. The U.S. saw storage restock of 93 billion cubic feet (Bcf), according to data released Thursday from the EIA.
A total of 2,022 Bcf of natural gas was in storage as of July 4, according to the latest estimates from the agency.
Still, stocks were 653 Bcf less than last year at this time and 769 Bcf below the five-year average of 2,791 Bcf. In the east region, stocks were 359 Bcf below the five-year average following net injections of 56 Bcf.
Demand for natural gas drops during the summer, and thus, is the typical time to restock supplies. “While this year's natural gas injection season began slowly in April, injections into storage during May and June were very strong,” the EIA said, noting that net injections were 100 Bcf or greater the past several weeks.
“Over the previous four years, weekly injections during May and June exceeded 100 Bcf on only three occasions,” EIA said.
The agency expects injections will slow during July and August as more natural gas goes to the electric power sector to meet air conditioning demand.
“The strength in storage injections is the result of strong production growth and moderate demand,” EIA said. “Marketed production in April set a record high, at 73.5 Bcf/d, according to EIA’s most recent data, with the largest increases coming from areas in Texas.”
Erica Bowman, vice president of research and policy analysis for Washington, D.C.-based trade group America’s Natural Gas Alliance, noted that there’s plenty of time left this summer to restock.
“We still have 18 to 19 weeks of injection,” said Ms. Bowman. “Given where we started the season, we’re doing a good job. The injections have been very aggressive, and we’re looking to be at 3,400 bcf by the end of the season, according to EIA estimates.
“Keep in mind the winter of 2012-2013 was a very mild winter. If you go back further to 2000-2008, the average was below 3,500 Bcf, so the range we’re looking at is normal.”
One big indicator on how comfortable the market is with the rate at which stocks are resupplying is the market price for gas, Ms. Bowman said.
“Natural gas prices dropped quite a bit to around $4.12 - $4.15,” she said. “If the market was nervous about how quickly storage was filling, that price would be higher. So the market seems to be comfortable with where it is, at least in the short term.”
The Henry Hub spot price, the benchmark for natural gas prices, decreased from $4.39 per million British thermal units to $4.15 MMBtu between July 2 and July 9, according to the EIA.
“It’s still at relatively low levels, and as we filled storage nationally, the price didn't go up, but actually tracked downward,” Mr. Gregorini said.
“There’s plenty of gas available, primarily shale gas,” he said.
Stephanie Ritenbaugh: firstname.lastname@example.org or 412-263-4910