What it means
Gas is produced steadily through the year but demand is seasonal, with peaks in winter heating and summer power generation. Storage acts as the shock absorber, so gas is injected into underground caverns and depleted fields when demand is low and withdrawn when demand is high.
The report is published weekly, normally on a Thursday, and states the total working gas in storage (gas that can actually be withdrawn) in billion cubic feet, or Bcf. It also gives the change from the previous week and compares the level with last year and with the five-year average.
Markets focus less on the raw number than on the surprise, which is the difference between the reported change and what analysts expected. A smaller injection than forecast suggests tighter supply and tends to push prices up, while a larger injection tends to push prices down.
Businesses beyond traders use it too. A utility buying gas for winter, an industrial plant budgeting fuel costs or an investor in a producer will all look at whether stocks are above or below the five-year average to gauge price risk over coming months.
The indicator has limits. Weather in a single week can swing the numbers, and the report covers storage levels but not production or exports in detail, so it is best read alongside weather forecasts and other supply data.
A practical habit is to read the report alongside the weekly weather outlook. A cold snap in the days before the survey will show up as larger withdrawals, which the market may already have expected, so the numbers should always be judged against forecast temperatures and the seasonal pattern.
The figures are also estimates compiled from company surveys and are occasionally revised later, so the first release is a good guide rather than a final audit.
In practice
Real-world examples.
Example
A gas trader sees a report showing a smaller injection than forecast. She buys futures within minutes, expecting prices to rise as the market adjusts to tighter supply.
Example
A utility's procurement manager notices storage is well above the five-year average going into autumn. He delays buying winter gas, expecting lower prices, and uses the report to justify the timing to his finance director.
Example
A chemicals company building next year's budget uses the storage surplus as one input, along with weather outlooks, when deciding how much of its gas needs to lock in at fixed prices.
Formula
Calculation
Net weekly change = Injections - Withdrawals
Storage surprise = Reported change - Analyst consensus change
Surplus to average (%) = (Current storage - Five-year average) / Five-year average x 100
Worked example: last week storage stood at 2,800 Bcf. This week the report shows net injections of 90 Bcf, while analysts expected 80 Bcf.
New storage level = 2,800 + 90 = 2,890 Bcf
Storage surprise = 90 - 80 = +10 Bcf, a bearish surprise for prices because more gas was added than expected.
If the five-year average for this week is 2,700 Bcf, the surplus = 2,890 - 2,700 = 190 Bcf.
Surplus in per cent terms = 190 / 2,700 = 0.0704, or about 7%.Case study
Seen in the real world.
Northgate Power is an illustrative, fictional utility that burns gas to generate electricity. In the autumn its finance team noticed storage had slipped from above the five-year average to below it over a few weeks.
The treasury team had not yet hedged its winter requirement. After reviewing several weekly reports and the cold-weather forecast, it fixed the price on 60% of expected winter volume.
Winter turned out colder than usual, and spot prices spiked. In this illustrative story the hedge saved the company millions of dollars, but the team still stressed that the report is one signal among many and not a guarantee. Afterwards the treasury team wrote a short policy requiring a review of the storage report, the weather outlook and the current hedge ratio every Friday during the heating season, so that future decisions would follow a documented routine.
Watch out
Common mistakes.
- Reacting to the absolute storage number without comparing it to the five-year average and the seasonal norm.
- Ignoring the consensus forecast, when the market price already reflects expectations and only the surprise moves it.
- Treating one week of data as a trend, when weather can swing a single report widely.
Questions
People also ask.
How often is the report released?
It is published weekly, normally on Thursdays, with schedule changes around public holidays.
What does working gas mean?
It is the gas in storage that can be withdrawn and sold, excluding the base gas that must stay in the facility to maintain pressure.
Does a high storage level always mean low prices?
Not always, because production changes, exports, weather and demand also move prices, but high storage generally puts downward pressure on them.
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