Natural Gas Rallies Following Smaller than Expected Inventory Build

Natural gas prices moved higher on Thursday following a slightly softer than expected build in natural gas inventories according to the Energy Information Administration. Prices closed at the highs of the session just shy of resistance near the 38.2% Fibonacci retracement level of the move from January to February.  Support is seen near the 10-day moving average at 2.85.  Momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices.

Working gas in storage Rose Less than Expected

Working gas in storage was 1,629 Bcf as of Friday, May 18, 2018, according to EIA estimates. This represents a net increase of 91 Bcf from the previous week. Expectations were for a 92 Bcf build. Stocks were 804 Bcf less than last year at this time and 499 Bcf below the five-year average of 2,128 Bcf. At 1,629 Bcf, total working gas is within the five-year historical range.

Demand increases week over week

Demand increases week over week as electric power sector consumption rises. Total U.S. consumption of natural gas rose by 4% compared with the previous report week, according to data from the EIA. Natural gas consumed for power generation climbed by 8% week over week as average temperatures for the week rose higher than 75°F in parts Texas and the Southeast. Industrial sector consumption stayed constant, averaging 19.9 Bcf/d. In the residential and commercial sectors, consumption increased by 3% with much of the West and Northeast cooler this report week compared with last report week. Natural gas exports to Mexico were the same as last week, averaging 4.4 Bcf/d.

U.S. liquefied natural gas exports increase week over week. Seven LNG vessels combined LNG-carrying capacity 25.8 Bcf departed the United States from May 10 to May 16. Six tankers from Sabine Pass liquefaction terminal and one tanker from Cove Point.