AGA: US gas storage about 32% full

US gas storage injections were about 32 bcf for the week ended Apr. 28, slightly better than predicted by Wall Street analysts. With gas prices continuing to exceed $3/MMbtu, the impact of increasing gas-fired power generation demand is adding tightness in the markets, says Dain Rauscher Wessels.


US natural gas storage injections were about 32 bcf for the week ended Apr. 28, slightly better than predicted by Wall Street analysts, said Dain Rauscher Wessels in a recent analysis of the American Gas Association's weekly statistics.

US gas storage is now 1.059 tcf, or 32.1% of full capacity. "With natural gas prices continuing to bask over the $3 [per MMbtu] mark, the impact of increasing gas-fired power generation demand is adding tightness in the markets. The evolution of the natural gas market is showing that prices are 'loosing' the dramatic seasonality," said the analyst. "Rather than taking its typical seasonal dip to reflect the lack of demand through the shoulder months between winter heating demand and summer cooling/power-generation demand, natural gas has seemed to settle over an unprecedented $3 mark."

The spot-futures price spread was zero when the firm released its report on May 4. This, said the analyst, reflects "short-term neutral sentiment" in the market.

The firm predicts that, with injections into storage remaining at the high end of the expected range and summer electricity futures being "flat to low," gas prices could decline, with front-month futures prices settling in the $2.95-3.15/MMbtu range in the short term.

"We continue to view gas prices as a proxy for power prices during tight markets for power," said Dain Rauscher Wessels. "Consequently, we believe that the natural gas market should be determined by the development of the market's expectations for the summer," said the analysts.

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