Natural Gas Price Break Out Despite In Line Inventory Build

Gas Inventories Where in Line with Expectations

The EIA reported that working gas in storage was 1,538 Bcf as of Friday, May 11, 2018. This represents a net increase of 106 Bcf from the previous week. Expectations were for a 105 Bcf build. Stocks were 821 Bcf less than last year at this time and 501 Bcf below the five-year average of 2,039 Bcf. At 1,538 Bcf, total working gas is within the five-year historical range.

U.S. Philly Fed index Rose

U.S. Philly Fed index climbed 11.2 points 34.4 in May, much stronger than expected, after edging up 0.9 points to 23.2 in April. It was 35.5 last May, which was a two-year high. Gains were broadbased.

Negative natural gas prices are rare

Negative natural gas prices are rare as they represent a producer paying a customer to take natural gas. Negative and near-zero pricing generally occur because produced natural gas volumes exceed available takeaway capacity. Natural gas flows out of western Canada have been facing seasonal maintenance constraints along NOVA, limiting flows out of Alberta to eastern Canada and to the U.S. Midwest. High natural gas storage inventories in western Canada combined with production growth and lower, shoulder-season demand contributed to downward pressure on spot prices at AECO, in Canada.

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