Near-record injection activity during the 2019 natural gas refill season (April 1–October 31) resulted in a rapid recovery of working gas stocks from their relatively low level at the end of the 2018–19 heating season. Working natural gas in storage in the Lower 48 states as of October 31 totaled 3,724 billion cubic feet (Bcf), according to interpolated data from EIA’s Weekly Natural Gas Storage Report released November 7. Total inventory as of October 31 was 37 Bcf higher than the five-year (2014–18) end-of-October average and 527 Bcf (16%) higher than last year at this time. Although the end of the natural gas storage injection season is traditionally defined as October 31, injections often occur in November.
A low starting inventory level has historically preceded strong refill seasons, and 2019 followed this pattern. Working natural gas stocks ended the withdrawal season this year on March 31 at 1,155 Bcf—the second-lowest level reported since 2004. From April 1 through October 31, 2019, EIA estimates that net injections totaled 2,569 Bcf. Net injections were 678 Bcf (36%) higher than the five-year average and 732 Bcf (40%) higher than net injections last year. This level was the second-highest net injected volume for the refill season ever reported, falling just short of the record level of 2,727 Bcf injected during the 2014 refill season. In 2014, working gas stocks ended the winter at 837 Bcf—the lowest level since 2003—and ended the refill season at 3,564 Bcf.
Continued strength in natural gas production during 2019 accounted for the large increase in natural gas storage volumes during 2019 despite increases in natural gas demand, which were primarily driven by natural gas-fired power generation increases, greater pipeline exports to Mexico, and growing liquefied natural gas (LNG) exports. The larger injections into working gas storage reduced the deficit to the five-year average, which exceeded 500 Bcf entering the refill season, and resulted in working gas inventories exceeding the five-year average on October 11—the first time since 2017.
The working gas difference to the five-year average tends to be negatively correlated with the Nymex near-month natural gas futures settlement price. Stocks that are high compared with the five-year average often correlate with lower natural gas futures prices. Conversely, stocks that are low compared with the five-year average usually correspond to higher natural gas futures prices.
This relationship is visualized as a scatterplot with natural gas futures prices on the y-axis and the level of stocks compared with the five-year average on the x-axis. Each dot represents a week, and the dots are color-coded to reflect different years. Pricing patterns have varied somewhat during 2019. Earlier this year, larger storage deficits, which exceeded 250 Bcf, were associated with futures prices ranging between $2.50 per million British thermal units (MMBtu) and $3.41/MMBtu. As the deficit to the five-year average diminished during the course of the refill season, prices eased somewhat, and the futures contract for next-month delivery at the Henry Hub generally traded lower than $2.50/MMBtu. Early season cold weather increased futures prices somewhat in recent weeks.
