Thursday, June 20, 2019 at 4:46PM
For the third time in four weeks, a very bearish EIA report vs expectations sent natural gas prices significantly lower, with the July contract making fresh multi-year lows, settling under the $2.20 level. The report showed last week's injection was a whopping 115 bcf. This was well above most estimates, by as much as 8-12 bcf. While not as loose in terms of supply / demand balances as some of the last several weeks, it was barely below the 10-week trend line. When looking only at the same gas week in prior years, the degree of looseness becomes more apparent, however. Oddly enough, this comes with prices at multi-year lows, and production levels that are, according to the data, off the highs from late March. Typically, such a trend in price along with production that is not increasing leads to a more material tightening of the supply / demand balance that what has been observed, raising concerns that supply levels may actually be higher than the data shows, or it could be partially a function of demand being very weak last week, and that it not a perfectly linear relationship between temperature and gas burns. Given that demand last week was as low as we will see until the end of the summer season, on an absolute basis given rising normals, we will be able to better assess this issue in the coming weeks. Sign up for a 10-day free trial here to check out the services we have to offer that can keep you ahead of these, and other market-moving changes.