Natural Gas’ Large Storage Overhang: How Large Is It Really?

investing.com:

For the better half of the first half, the natural gas market felt like the same market though it got progressively better for longs in the game even if the weather didn’t at first.

With the first month of the second half nearly over now, something else has evidently improved though it isn’t making news the way production is: Storage.

According to S&P Global’s records, historically, “the lowest storage injection of the summer has come in the third week of July when the average weekly injection falls to just 31 bcf.” After which, it said builds get “progressively larger,” through the end of the injection season. 

Last week, we got 40 bcf, or billion cubic feet, for the first week of July. Later today, the U.S. Energy Information Administration, or EIA, will provide the storage update for mid-July, which should bring us nearer to that 31-bcf target.

Some in the trade are, however, challenging the so-called norm for storage cited by the S&P. 

John Sodergreen, who publishes a weekly note on gas under the heading of “The Desk”, is one, arguing that a better term might be “incrementally, sorta larger,” from the five-year average low spotted during the first week of July.

The declining rig count in gas — immaterial thus far to higher production — could become material as shipments of LNG, or liquefied natural gas, ramp up, he says, adding:

“For the better part of ’23, supply has been going through a very significant set of shifts, meaning lower rig counts, but generally higher productivity. As of this  month, however, our tea leaves suggest  that the impressive productivity, through  better technology or techniques, will no  longer cover the huge year-on-year deficit  of iron in the ground.” 

In Sodergreen’s own words, he sees