EIA Insights August 30, 2018
Injection Greater Than Expectations
The EIA reported a 70 Bcf Injection for the week ending August 24, 2018. The injection was above the average, 65 Bcf, for this week of the year, and above the average of expectations of a 64 Bcf injection. Expectations had a range from a 58 Bcf injection to a 70 Bcf injection.
The 70 Bcf injection was a surprise because for the last several weeks the injections were less than expectations. Injections should increase in magnitude if normal, milder weather occurs in September. However, the injections must be significantly greater than average for the storage level at the end of the summer injection season to be greater than 3,200 Bcf.
Prices dropped 3 cents with the release of the report but reversed and traded up through the remainder of the trading day, ending up about 2 cents for the day. This was unusual considering the bearish nature of the storage report.
Prices have yet to break through the $3.00 level. After nearing $3.00, prices had three consecutive large down days, but now have returned to the $2.89 level. Prices remain range bound between $2.85 and $3.00. We still believe the fundamentals are bullish to price. So we still suggest consideration of trading from the long side, and especially if prices can break through the trading range above $3.00.
