HardAssetsInvestor

Written by Sumit Roy  |

November 17, 2011

Natural Gas Report: Inventories Hit Record, Wiping Out Deficit

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At one point in May, North American natural gas inventories were 401 bcf below the year-ago level. That entire deficit has now been wiped out.

The Energy Informational Administration (EIA) reported that storage operators injected 19 billion cubic feet of natural gas into storage in the week ending Nov. 11. That was below estimates that were calling for an injection near 25 bcf, but above last year’s withdrawal of 5 bcf and the five-year average injection of 7 bcf.

These injections into storage are part of the yearly cycle of natural gas supply and demand, and insufficient natural gas going into storage now can mean shortages in the future during peak demand.

After last week’s injection, the inventories reached 3,850 bcf — a record high, and 15 bcf above the year-ago level. As can be seen from the chart below, recent injections have been consistently and significantly above the five-year average, indicating a very oversupplied market.