As of April 20, 2012, natural gas storage inventories were 872 Bcf higher than this time last year. This represents a huge year-over-year storage surplus.
With total U.S. storage capacity estimated at around 4,200 Bcf and 27 weeks remaining in the summer injection cycle, weekly injections need to be just 60 Bcf/day to reach maximum storage capacity. By comparison, the weekly injection pace in 2011 was 76 Bcf/day and the five-year average injection pace is 73 Bcf/day.
“Storage is still very bearish for natural gas prices. Even with a normal 2012-2013 winter season, the year-over-year storage surplus won’t likely be worked through until some point in 2013. But, as surplus declines, natural gas prices will begin to strengthen,” explained Valerie Wood, President of Energy Solutions, Inc.
As a result, analysts project that as storage refills well in advance of the end of the season on October 31, 2012, the natural gas market will be faced with physical constraints as there will simply be no place to go with natural gas. This will likely cause production shut-ins and a collapse in spot-market prices.
Additional information about natural gas storage inventories, price trends, demand issues, production levels, rig counts, and much more can be found in the Monthly Edition of The Advisor. Take a FREE, no-obligation 60-day trial to The Advisor and receive the most recent Weekly Edition, as well as the Monthly Editions for May and June, which will contain additional insight into bearish, bullish and neutral factors that affect pricing within the Natural Gas Industry. Learn more by visiting www.energysolutionsinc.com.
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About Energy Solutions, Inc.
Formed in 1996, Energy Solutions, Inc. is independently owned. With more than 50 years of experience in the natural gas industry, our team focuses on natural gas prices and in helping businesses improve their internal processes for the purchase of natural gas.