US natural gas inventories increased by 20 Bcf for the week ending April 2, compared with the five-year (2016–2020) average net injection of 24 Bcf and the market consensus of 27Bcf. Working gas stocks total 1,784 Bcf, which are 24 Bcf lower than the five-year average and 235 Bcf and lower than last year at this time.
Early projections for where we will end the injection season are around 3.7Tcf. This would be in line with the five-year average for storage, but it is still too early to have a high degree of confidence in that forecast. Weather will continue to produce near-term price volatility throughout the next few weeks.
Strong demand for LNG will keep daily exports at or near maximum capacity. We anticipate the current trading range to be maintained until we see heat in major consuming areas. For the longer term, we see the support growing for price escalation as demand continues to grow at a faster pace than supply. Pay attention to injections over the next few weeks as that will either build confidence in the 3.7Tcf end of season projection or convince the market that storage will underperform against the five-year average.
End users with exposure to natural gas prices for the next few years need to practice diligent and prudent risk management. With exceptional value currently seen in the deferred years, end-users need to be FORWARD thinking to manage their long-term risk exposure to the natural gas market.
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