In an effort to bring more clarity to its market-moving weekly natural gas storage inventory report, the US Energy Information Administration plans to track the flow of gas into and out of storage while excluding the impact of reclassifications.
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The reclassification of gas from base to working -- or vice versa -- has sometimes distorted the estimated net storage inventory change in EIA's weekly report, creating some initial confusion in the market right after the data's 10:30 a.m. EDT Thursday release. The agency reports such reclassifications only when the impact is 7 Bcf or greater on a regional or national level.
EIA's report still will contain the net change column while adding an adjacent "implied flow" column, reflecting the week-to-week difference in working gas inventories that excludes any such reclassifications.
The change is "another way to present the information that more clearly reflects actual flows into and out of storage," said EIA economist Jose Villar.
"EIA is trying to provide further transparency into their weekly storage report to ease market confusion during an announced reclassification of inventory levels," said Logan Reese, an analyst with Bentek Energy, a unit of Platts.
Given that the storage report, upon its release each Thursday, often influences trading on the NYMEX natural gas futures contract, the change could also act as a "market-calmer to clarify the EIA report vs. expectations comparison," Reese added.
"Most people have gotten used to the fact that the report may or may not include some reclassification," said Stephen Smith, principal of Stephen Smith Energy Associates. "So it's not a massive change, but it gives a little bit clearer picture of what's going on."
Smith said "about 98% of the time, the report doesn't include any reclassification. But in the 2% to 3% of the weeks when it does include reclassification, you get a distortion of actual flows. This should clear that up."
EIA said that adding the column will allow users to find that number directly, rather than calculating it themselves using the data on storage levels from the prior and current weeks in conjunction with reclassification data. The change also "will permit automated retrieval systems to to choose the measure most directly relevant to their purposes," EIA said.
The agency said it would continue to provide a note on any reclassifications above 7 Bcf as part of the report.
EIA said it would conduct testing of the new report later this year before implementing the change. Typically, the agency will announce testing 10 days prior to a two-week test, Villar noted, although he did not specify a date when the change will become standard.