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EIA Drops Bear Bomb on the Natural Gas Futures Rally

The EIA dropped a “bear bomb” on the natural gas market on Thursday, citing a significantly larger-than-expected 76 Bcf injection into storage for the week ending June 25. The EIA result was 3 Bcf over last year’s build for the same period, slightly outside the range of estimates in critical surveys. The average over the previous five years was 65 Bcf.

Early Thursday, natural gas futures prices, which had been substantially higher, began to fall in anticipation of the latest government storage report. The August Nymex futures contract was trading about $3.640 in the minutes leading up to the EIA release after soaring beyond $3.760 early in the day.

EIA Drops Bear Bomb on the Natural Gas Futures RallyThe prompt month fell to $3.629 as the print made its way across trade floors, then briefly fell below $3.600. August was selling at $3.618 at 11 a.m. ET, down 3.2 cents on the day. The 76 Bcf injection, according to Bespoke Weather Services, was substantially looser in terms of balance than last week’s 55 Bcf build. However, the supply/demand balance is still a touch tighter than the five-year average.

Furthermore, next week’s estimate is expected to be tight, probably much below Bespoke’s early projection of a 30 Bcf increase. Bespoke said, “Prices sold off on this number, but we really do not see the backdrop as bearish, even in light of the 76 bcf build, and the much higher price point versus the last couple of weeks.”

On The Desk’s online energy chat, Enelyst Sharp and other market watchers addressed the latest storage data. According to participants, wind power during the EIA reference period made up for what it had failed to deliver in the previous week’s more optimistic report. This week, however, it’s come straight back off.

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