TMT: Thursday’s Natural Gas Storage Report

Video Transcript

For today’s Two-Minute Tuesday, we’re going to talk about Thursday — specifically why Thursday could be a good or a bad day to execute energy contracts.

What happens on Thursdays?

Every Thursday at 10:30am ET, the Energy Information Administration (EIA) releases its Natural Gas Inventory Report. You may have heard it called the Storage Report.

This report details exactly how much gas reserves we have as a nation — specifically how much working gas we have. “Working gas” is natural gas that has been extracted from the ground, cleaned, and is ready for use.

Natural Gas Storage Report - Chart

Natural Gas Storage Report - Graph

What’s in the Storage Report?

There are two time periods covered in the natural gas Storage Report — injection season and withdrawal season.

Injection Season

During the summer, we produce more natural gas than we use, and our excess gas is put into storage. This season is called “Injection Season” in which we see our gas inventories increase week to week.

Withdrawal Season

Meanwhile, in the winter we use more gas than we produce. During this time, we borrow from our storage inventory to meet our daily needs for natural gas. This season is called “Withdrawal Season” in which we see our natural gas stock decrease week to week.

How does the Storage Report affect rates?

Thursday’s natural gas report can affect natural gas and electricity rates either positively or negatively, depending on the final inventory number.

Each week, energy traders predict what the final storage number will be. Any surprise in the positive or negative in the final storage number can cause prices to go up or down.

For example, let’s say energy traders are predicting that there will be a 100 bcf withdrawal in a given week. However, that week we only see a 50 bcf withdrawal. That means our natural gas stock is healthier than we thought, and we would expect to see rates go down after that week’s Storage Report.

Any volatility that we see in energy pricing on Thursdays will depend on the difference between the predicted storage number and the number that we see in the final Storage Report.

Keep Thursdays in mind when fixing a rate.

So: is Thursday a good day to fix energy rates? Well, it depends on the week. Thursday’s Natural Gas Storage Report can mean a bullish day for energy rates — or, it could be an excellent to lock in lower rates for those that are closely watching the market.

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