Natural gas storage
The EIA reported that working gas in storage reached 2,129 Bcf for the week ending July 11th. This puts storage 22% below year ago levels and 25% below the five year average. The cool weather together with strong volumes of production from the Marcellus have worked together to provide ample gas for storage injection.
The injection of 107 Bcf into storage last week was 1 Bcf higher than the previous high for the same week in 2007. The average injection for that week since 2006 is 80 Bcf so injection was 33% above that level.
The graph below gives some additional perspective where the current storage level fits in historic terms since 2006. The peak storage volumes for each year are shown at the top of each year’s injection curve.
If the summer weather continues to be cool along with no production disruptions such as hurricanes natural gas in storage may breach the 3,500 Bcf level by the start of winter. In that case the price of natural gas could once again test the financial wisdom of the drilling programs of many producers.