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Storage to show week-on-week improvement, smaller than historical average build

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Essential Energy Insights - February 2021

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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021


Storage to show week-on-week improvement, smaller than historical average build

The weeklynatural gas inventory report to be released by the U.S. Energy Information Administrationat 10:30 a.m. ET on Thursday is expected to show natural gas inventories climbingat a rate improved from the most recent modest injections but still well below historicalaverages.

Analystsand traders surveyed ahead of the release of the upcoming EIA storage report anticipatea 46-Bcf to 67-Bcf injection, with the consensus expectation being a storage buildof 58 Bcf, above the previous week's injection of 39 Bcf, but well below the five-yearaverage injection of 77 Bcf and sharply below the 95-Bcf injection reported forthe same week in 2015.

Coolingdegree day data from the National Oceanic and Atmospheric Administration for thereview week to July 9 reflect weather supportive of demand, outlining 21.2% morecooling degree days compared to the same week last year, and 15.9% more than normalfor the week.

"Themarket was 4.1 Bcf/d tighter last week and has averaged 3.9 Bcf/d tighter over thelast 4 weeks," analysts with Raymond James said in a note. "We expectthe market to run 3.5 Bcf/d tighter on a y/y basis for the week."

The analystsexpect a build of 56 Bcf in this week's inventory report that if correct would drivethe storage surplus of 513 Bcf to a surplus of 471 Bcf.

In theprevious week''s data,the reported net 39-Bcf injection into natural gas inventories in the Lower 48 duringthe week ended July 1 was a downside miss against the market consensus ahead ofthe report's release that called for a 44-Bcf build to stocks, and was below the83-Bcf injection reported for the same week in 2015 and below the five-year averageinjection of 77 Bcf.

The buildbrought the total U.S. working gas supply to 3,179 Bcf, some 538 Bcf above the year-agolevel and 599 Bcf above the five-year average storage level of 2,580 Bcf.

An injectionat the survey consensus for this week's data would result in a total working gassupply of 3,237 Bcf. The year-on-five-year-average surplus would shrink to 580 Bcfwhile the surplus to the year-ago level would fall to 501 Bcf.

Market prices and included industrydata are current as of the time of publication and are subject to change. For moredetailed market data, including our power,naturalgas and coalindex prices, as well as forwardsand futures,visit our Commodities Pages. To view detailed EIA Weekly Natural Gas Storage data,go to our NaturalGas Storage Page.