The story of current natural gas storage in the U.S. is a two-sided tale. On one hand, inventories have sat at unprecedented high levels throughout the season. On the other, the pace of injection since April, and especially, during the heart of the summer has been extremely slow. At the current pace, inventories have the chance to establish a seasonal peak that falls shy of the 4-Tcf record set in 2015. This prospect seemed remote just a few months ago.
On April 1, the market was staring at a year-over-year storage surplus of more than 1,000 Bcf. Since then, that surplus has declined dramatically, falling to 275 Bcf as of August 19. Injections over that 20-week period netted 870 Bcf compared to 1,603 Bcf added a year ago. This data implies that about 4.8 Bcf per day of natural gas that was available to be placed into storage in 2015 no longer is on the table.&nbsp; For just the third summer week in history, and the first since 2006, the market saw a net weekly withdrawal in July, as demand outweighed supply for the week.
The factors driving the year-over-year shift in market fundamentals are on both sides of the balance. Declines in domestic production have been partially offset by an uptick in imports from Canada, but overall supply has held lower than last summer. Shifts on the demand side of the ledger have been more robust, as power generators have consumed more natural gas than ever in recent months and exports from Texas to Mexico and out of the Sabine Pass LNG export terminal have ramped up.
For now, the market does not appear to be overly concerned about the storage situation, with nearby NYMEX gas holding below $3 per MMBtu. After all, inventories remain on pace to enter the coming heating season at healthy &ndash; if not record &ndash; levels.&nbsp; However, the factors that have been tightening the market don&rsquo;t appear to be going anywhere anytime soon. Barring an unlikely repeat of last year&rsquo;s historically mild winter, inventories will be drawn down quickly between November and March. This is a prospect that could increase volatility throughout the winter and leave storage levels near the bottom of the five-year range ahead of next summer at a perceived shortage.
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LOCATION
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24-Aug. 16
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25-Jul-16
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25-Aug-15
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NYMEX
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$2.749
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$2.747
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$2.685
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NNG Ventura
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$2.560
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$2.705
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$2.610
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Calif. Citygate
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$2.765
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$3.620
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$2.935
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The story of current natural gas storage in the U.S. is a two-sided tale. On one hand, inventories have sat at unprecedented high levels throughout the season. 

Natural gas storage inventories are growing at a snail's pace

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