News / Business
Rapidly Refilling Storage Could Lead to a Natural Gas Price Collapse
In its July edition of The Advisor, Energy Solutions, Inc. takes an in-depth look at natural gas storage inventories and the potential implications that storage may have on natural gas prices.
Natural gas storage inventories are refilling at record pace. There is still 17 weeks remaining in the injection season, but the West and Producing Regions are already almost full. This raises an interesting question – what will happen if there is no room left for storage injections? This issue is discussed in detail in the July edition of The Advisor.
“With reduced natural gas demand from the industrial and electric power sectors, natural gas storage inventories are refilling at record pace,” says Valerie Wood, President of Energy Solutions, Inc. “Each week the Energy Information Administration (EIA) reports the estimated pace of injections and/or withdrawals from storage. From this information, the natural gas industry assesses the supply/demand balance, and right now there is no indication this balance has tightened even though the natural gas drilling rig count has declined substantially.”
The weekly EIA storage inventory data is released each Thursday at 9:30 a.m. CST. The data is broken down by three regions – East, West, and Producing. With the West and Producing regions getting closer to maximum levels, it means more natural gas could be diverted to the East region for injection into storage. “Refilling natural gas storage inventories to record levels has become a foregone conclusion, and given the rapid pace of injections, there is an increased potential for a natural gas price collapse this fall,” says Wood. “Currently, the year-on-year storage surplus is already in excess of 600 Bcf, which means even hotter weather or a tropical storm disturbance is unlikely to derail record level storage inventories this fall.”
Natural gas buyers can stay up-to-date with these types of price-moving events through The Advisor, which contains long and short-term natural gas pricing outlooks and other valuable tools and insight to assist in a company’s natural gas buying decisions. With 12 monthly editions, 48 weekly editions, and ongoing alerts and educational analyses, natural gas buyers will be pleasantly surprised at how cost effective this publication is. Remember, knowledge is power," says Wood.
For a free copy of the recently issued July edition of The Advisor, send your request to july-request@energysolutionsinc.com or call (608) 848-9589.
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About Energy Solutions, Inc.
Formed in 1996, Energy Solutions, Inc. is independently owned. With more than 25 years of experience in the natural gas industry, our team focuses on natural gas prices and in helping businesses improve their internal processes for the purchase of natural gas.
