Daily Market Report – Oct 07, 2022

The EIA reported a repeat +129 Bcf injection for the week ending Sept 30th, which came in much higher than our estimate of +121. This storage report takes the total level to 3106 Bcf, which is 165 Bcf less than last year at this time and 264 Bcf below the five-year average of 3,370 Bcf. This is the 3rd triple-digit build in a row, and in fact, this is the 3rd highest of all time. The #1 spot goes back to week ending July 4, 2003 and the #2 spot goes back to week ending May 29, 2015.

 With this string of loose builds, we are quickly erasing that year-on-year deficit.

With such a massive injection, we are still having a hard time explaining it from the data we are seeing. By our count this report was 5+ Bcf/d loose, and that’s with normalish wind + solar output.

Below are some details that somewhat tell the picture:

1. Total supply jumped by almost 1 Bcf/d from domestic sources and Canadian imports. Luckily, production out of the GoM was minimally impacted due to Hurricane Ian.
2. Overall gas consumption was much lower week-on-week. The L48 population wt. CDDs fell quite hard this past week, specifically on the backend of the week as Hurricane Ian and Fiona kept the entire East coast cooler. For the reported week, CDDs drop by 3.8F week-on-week and HDD pick up by 2.5F. With the big drop in CDDs (specifically across the Eastern seaboard) and the head-on hurricane hit, power loads dropped by 26 aGWH or 10.8% from the previous week. This led to natgas generation being off by 25.8 aGWh which converts to 4.8 Bcf/d of less power burns. The rising HDD cound did finally add to the RC demand in the Northern part of the country. With this time of the year being the transition week, it is likely our storage miss came from our over estimate of RC load for the week.
3. Mexican exports and LNG feedgas levels were another two outliers to the loose theme, which both rose by 0.3 to 0.4 Bcf/d Bcf week-on-week.

Here is a quick table comparing this past week to the same week in 2021.

Today’s Fundamentals

Daily US natural gas production is estimated to be  101.5 Bcf/d this morning. Today’s estimated production is -0.08 Bcf/d to yesterday, and -0.84 Bcf/d to the 7D average.

Natural gas consumption is modelled to be 76.1 Bcf today,  +3.32 Bcf/d to yesterday, and +2.54 Bcf/d to the 7D average. US power burns are expected to be 31.4 Bcf today, and US ResComm usage is expected to be 14 Bcf.

Net LNG deliveries are expected to be 11.1 Bcf today.

Mexican exports are expected to be 6.4 Bcf today, and net Canadian imports are expected to be 5.5 Bcf today.

The storage outlook for the upcoming report is +129 Bcf today. (More low triple-digit injections to come after)

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