Natural gas tank
Working natural gas in storage in the Lower 48 states as of October 31 totaled 3,784 billion cubic feet (Bcf), as interpolated from EIA’s Weekly Natural Gas Storage Report data released November 9. The natural gas storage injection season has been traditionally defined as April 1 through October 31, although injections often occur into November. Inventories at the traditional end of this year’s injection season were 58 Bcf (2%) lower than the five-year (2012–16) end-of-October average and 193 Bcf (5%) lower than the record-setting level of 3,977 established last year.
Working gas stocks ended the withdrawal season this year at 2,036 Bcf on March 31—the third highest level ever reported, falling 425 Bcf below the record level of 2,461 Bcf reported at the end of March in 2016. From April 1 through October 31, EIA estimates that net injections this year totaled 1,754 Bcf and were 298 Bcf (15%) lower than the five-year average and 238 Bcf (16%) more than injections last year. This was the third-lowest net injected volume for the refill season since 2007, with net injections this year exceeding only the 2012 total of 1,456 Bcf and the 2016 total of 1,516 Bcf—the only years with working gas levels over 2,400 Bcf at the beginning of the refill season.
Injection levels during refill season level can vary considerably, depending in large part on inventory levels at the start of the refill season. In 2016 and 2012, a high April 1 starting point and stronger-than-average power sector consumption during the late-spring and summer contributed to lower-than-average weekly net injections. Similarly, this year, a high April 1 level also resulted in a slower-than-average pace of injections. However, in 2017, increased natural gas demand came from the export sector, offsetting year-over-year declines in domestic electric power sector consumption of natural gas. In the past three years, working gas stocks have ended October within 200 Bcf of the previous five-year average.
Working gas levels have fallen below the five-year average in recent weeks, which may suggest that the market is tightening. The slow pace of injections during the 2017 refill season resulted in the difference between the working gas and its five-year average declining from a surplus of 265 Bcf on March 31 to a deficit of 58 Bcf on October 31. Historically, working gas deficits to the five-year average are correlated with higher spot prices at the Henry Hub, and surpluses to the five-year average are correlated with lower spot prices. Persistent working gas deficits to the five-year average could contribute to higher prices if natural gas supplies from storage become significantly more constrained in meeting increases in natural gas demand.
