One of last summer’s biggest hits was Katy Perry’s ‘Last Friday Night (T.G.I.F.)’. I was one of the many who were guilty of humming along, living vicariously through the lyrics, intermittently shouting TGIF (Thank Goodness It’s Friday)! For the natural gas markets, the real action occurs on Thursdays, the day of the weekly Energy Information Agency (EIA) natural gas inventory report. The result can be volatile prices. Since market volatility is generally not end user-friendly, this is a warning to steer clear of buying natural gas and electricity at this time.
Each Thursday at 10:30 a.m. EST, the EIA releases a report of the quantity of natural gas that was either injected into or withdrawn from natural gas storage facilities across the United States. All storage operators are required to submit their operating data so all market participants learn the results at the same time.
If more gas has been consumed than produced, then the shortfall is taken out of storage, also known as a “withdrawal”. If more gas has been produced than consumed, the excess supply is put into storage, and is known as an “injection”. Withdrawals typically occur from November through March due to heating demand and injections occur from April to October when demand is reduced. Of course, there are other factors that can impact storage activity such as gas demand for power generation due to air conditioning needs in the summer, trends in gas production output, increased gas demand due to coal-to-gas switching in the generation stack due to low gas prices or EPA regulations, etc.
