Analysts are predicting that the natural gas storage report to be released tomorrow at 10:30 AM EDT by the Energy Information Administration will show a build of approximately 93 billion cubic feet (BCF). Some predictions are as high as 102 BCF. The same week 12 months ago we saw an injection of 90 BCF.
Assuming we get 93 BCF, that would put the total inventory 1.4% above the five year average at 2.117 trillion cubic feet (TCF), and 9.7% lower than last year. It is likely that we have seen the last withdrawal for the 2011 cooling season. So now will begin building stockpiles until the fall heating season kicks in.
It is hard to tell if this year will be more of the same that we have seen for the past couple years. There is no disputing the fact that we have more massive supply here in the US in terms of producing regions, as well as thousands of wells that have been drilled but are not yet producing. These can easily be ramped up, and if prices firm up it would create more incentive for producers to get them online. On the other hand, oil prices have resulted in lots of rigs shifting to oil from natural gas. Additionally, LNG activity has picked up and the global market is paying a two to three times the price for natural gas. All you have to do is look out the curve to 2014 and beyond to see that market sentiment turns more bullish in the not so distant future.
If you are trying to make smart business electricity buying decisions you need to be aware of both the supply side, as well as the impact of growing global demand for LNG. Business electricity rates have been so low for a couple years now, but history will tell us that the party will end at some point.