Slower Pace of U.S. Natural Gas Inventories Rise

The latest U.S. government natural-gas data, set to be released on Thursday, are anticipated to reveal an increase in inventories that is significantly smaller than usual. This is largely attributed to the prolonged heat in Texas, the leading state in natural-gas consumption, which has resulted in higher electricity demand from gas-fired power plants.

According to a survey conducted by The Wall Street Journal, the Energy Information Administration is expected to report an 18 billion cubic feet rise in gas storage during the week ending on July 28. This forecast is based on the opinions of 13 analysts, brokers, and traders. The estimates range from a 13 billion cubic feet increase to a 24 billion cubic feet increase. Comparatively, during the same week last year, there was a 37 billion cubic feet injection into storage, and the average rise over the past five years is also 37 billion cubic feet.

Get ready for the release of the natural-gas storage data at 10:30 a.m. EDT on Thursday by the EIA.

If the actual increase aligns with the forecast, then gas stockpiles will amount to 3.005 trillion cubic feet, which is 23% higher than last year's total at this time and 12% higher than the five-year average for this period. Normally, inventories do not surpass 3 trillion cubic feet until early September.

Low natural-gas inventories were a prevailing issue throughout most of last year due to increased demand for heating and cooling, as well as disruptions in production caused by storms. Conversely, domestic natural-gas production reached record-high levels at the beginning of this year and has remained strong. However, demand has been sluggish in 2021 due to a mild winter and reduced demand from the contracting U.S. manufacturing sector.

These factors, combined with a slow start to the hurricane season, have contributed to an oversupply of natural gas and have resulted in prices being approximately 45% lower compared to the same time last year, hovering around $2.476 per mmBtu.