The Energy Information Administration (EIA) Natural Gas Storage report measures the change in the number of cubic feet of natural gas held in underground storage over the prior week. While it is a U.S. indicator, it tends to have a larger impact on the Canadian dollar because of Canada’s large energy sector.
If the increase in natural gas inventories is more than expected, it implies weaker demand and is bearish for natural gas prices. The same can be said if a decline in inventories is less than expected.
If the increase in natural gas is less than expected, it implies greater demand and is bullish for natural gas prices. The same can be said if a decline in inventories is more than expected.
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Oil Inventories and Prices :
Natural Gas prices are dynamic. When it comes to tangible goods, It may take time for prices to balance as the market reacts to changes in supply and demand. In the case of oil, the price adjustments can be instantaneous. When US Gas inventories go up, traders may question demand for oil at the current price and immediately sell their positions, causing a price retreat. When Natural Gas inventories decline, traders can take this as a signal that demand is increasing, and they may buy back into the oil market, bidding up prices.
EIA Natural Gas Inventories :
The U.S. Energy Information Administration (EIA) provides a weekly update on domestic inventories. The weekly inventory report shows how U.S. Gas Storage stocks, other than those in the strategic petroleum reserve, have changed in the prior week. This is a major market-driving data piece. Ahead of the inventories report, analysts issue projections on inventory adjustments. If the EIA’s reading differs from analysts’ estimates, Natural Gas prices can react dramatically. The EIA’s weekly inventory report also updates total stockpile levels that can be compared to average stockpile readings from prior years.
Another crucial component of the EIA’s inventory data is the reading on the amount of Gas stocks at the Cushing, Oklahoma delivery hub. Oil is delivered from production areas across the United States, stored in Cushing, and then transported to end refining markets. Inventory levels at Cushing reflect the pace at which the U.S. oil supply is moving from inland production areas to end refining markets. An inventory build-up indicates that more oil is being supplied than can be transported away for refining. West Texas Intermediate (WTI) crude oil prices, the major North American benchmark, are set in Cushing.