Natural Gas: Prices Surge With Inventory Deficits


Natural gas put in a huge double-digit advance last week, as inventory concerns more than offset bearish production figures.

The Energy Informational Administration (EIA) reported that storage operators injected 83 billion cubic feet into storage in the week ending May 27, 2011. That was below estimates that were calling for an injection of between 90 and 94 bcf, as well as last year's build of 88b cf and the five-year average of 101 bcf.

In turn, the inventory deficit against last year and the five-year average rose to 250 bcf and 90 bcf, respectively. These injections into storage are part of the yearly cycle of natural gas supply and demand, and insufficient natural gas going into storage now can mean shortages in the future during peak demand.

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