The market made a violent move higher yesterday after the release of the EIA storage number, despite the EIA number coming in on the high side and bearish weather runs coming in throughout the week. Rumors started emerging of 7 offshore oil producing platforms (owned by Shell, Chevron and Equinor ) were halted on a pipeline outage. With over 600 kbbls/d of oil shut-in, the impact on associated gas sent gas prices screaming higher. In the end it was a quite the over reaction. Late in the day, it was reported that the flange connecting two pipelines onshore in Louisiana failed and caused about two barrels of oil to spill onto the ground.
The GoM produces roughly ~2.1 Bcf/d of gas. Today’s model output for the area shows it down by roughly 0.3 Bcf/d.
Source: Bloomberg
Moving on to the storage report from yesterday. The EIA reported a +44 Bcf injection for the week ending Aug 5th, which once again came in higher than the market consensus. This time it was in line with our final estimate of +45. Both our flow model and SnD model lined up with this number, giving us good transparency into what this report meant fundamentally. This storage report takes the total level to 2501 Bcf, which is 268 Bcf less than last year at this time and 338 Bcf below the five-year average of 2,794 Bcf.
So the back to back loose number adds confidence to the story. We calculate the +44 Bcf injection being +2.0 Bcf/d loose vs the historical rolling 5-week period (wx adjusted).
Table shows the daily wx adjusted loose or tight nature of this report.
Wind remained strong for the reporting period as well; hence wind adjusted we see this report rought +1.0 Bcf/d loose.
Today’s Fundamentals
Daily US natural gas production is estimated to be 97.5 Bcf/d this morning. Today’s estimated production is -0.19 Bcf/d to yesterday, and -0.88 Bcf/d to the 7D average.
Natural gas consumption is modelled to be 77.7 Bcf today, -3.91 Bcf/d to yesterday, and -4.7 Bcf/d to the 7D average. US power burns are expected to be 39.9 Bcf today, and US ResComm usage is expected to be 8.2 Bcf.
Net LNG deliveries are expected to be 11.4 Bcf today.
Mexican exports are expected to be 7.1 Bcf today, and net Canadian imports are expected to be 5.1 Bcf today.
The storage outlook for the upcoming report is +26 Bcf today.
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NatGas-Daily-Report-Aug-12-2022.pdf