LONDON (Commodity Online): US natural gas markets settled much weaker on a storage injection that was in line with consensus expectations. The prompt month dropped 17 cents to $4.41/MMBtu.
Calendar 2011 lost 15 cents to $4.56 and calendar 2012 fell 11 cents to $4.89. The EIA storage injection was reported at 69 Bcf, which was right in the middle of consensus estimates. However, prices reacted negatively as the market is looking for storage injections that imply a tightening of balances.
The storage deficit to last year widened to 275 Bcf, the widest yet this year. However, with temperatures looking increasingly milder in recent forecasts, this sizable deficit is one of the only market supports.
We expect the storage deficit to narrow considerably through the duration of injection season as temperatures fail to match up with those of last summer and as production continues to outpace last year's levels.
Next week's report is likely to narrow this deficit and we would venture that the current deficit will not widen beyond the current deficit in subsequent weeks.
Cash prices finished mostly higher, with Henry Hub up 2 cents to $4.54, SoCal Border up 7 cents to $4.64, and Transco Zone-6 NY up 6 cents to $4.82.
