Natural gas stocks are expected to show a build of 87 bcf this week, which would represent a decline from last
week’s 104 bcf increase. Last week’s build will likely remain as the highest build of the year, as the seasonal pattern
shows declines in the rate of increase into the height of the summer cooling season. Our prediction is based on a
cooling degree day forecast of 44.1, which is 13.3 degrees above the 30.8 ten-year normal. Temperature maps show
generally above to much above-normal temperatures covering the eastern half of the country. Temps moderate
slightly next week, with the eastern half of the country covered by either normal or above-normal temps. The early
CDD forecast is 49.0 compared to a ten-year normal of 38.1. The implication on inventories is for an increase of 94
bcf compared to a five-year normal of 96 bcf.
The latest Platts survey is looking for a 1.0 million barrel decline in crude oil stocks, a 750,000 build in gasoline supplies, and a 950,000 barrel increase in distillate inventories. Looking at our own estimates, for the week ending May 25 we would look for refinery crude oil runs to have remained about steady, but gross imports should have declined from the previous two weeks’ averages which lie above our estimated mean. As such, our numbers would suggest a decline in crude oil stocks a bit less than what the market is looking for. Turning to gasoline, implied demand last week likely remained above 9.0 MMB/D given the holiday, while gross imports should have fallen off from the previous week’s average of 1.102 MMB/D. Assuming roughly steady refinery output, we would come up with a modest draw in gasoline inventories for last week. Finally, for distillate, even under our estimate of manufacturing activity implied demand should have eased a bit from the prior week, while supply likely remained about even. Our balance would therefore imply a distillate stock build slightly in excess of analysts’ expectations.
