Natural gas storage rises 53 Bcf to 3,351 Bcf, above the 5-year average but 146 Bcf below last year

U.S. utilities and storage operators added 53 billion cubic feet (Bcf) of natural gas to underground storage in the week ending Sept. 18, the Energy Information Administration said on Thursday. That brought working gas in the Lower 48 states to 3,351 Bcf, up from 3,298 Bcf a week earlier, according to the EIA's weekly storage report. A Wall Street Journal headline called the increase expected.

Front-month natural gas futures were up 5.39% at $3.19 per million British thermal units shortly after the release, Seeking Alpha reported. Crude oil was also higher on Thursday.

The number behind the number

A single week's build says little by itself. The useful comparison is how full storage is against the usual level for this point in the year, because that is the cushion the country takes into winter. The EIA gives two benchmarks, and they tell different stories:

So storage is comfortably normal by the five-year measure, but it is 146 Bcf tighter than it was a year ago. A trader who looks only at the five-year average sees no supply problem. A trader who compares with last winter sees less room if the weather turns cold. Futures rose more than 5% on the day. No single report explains a day's move, but the year-over-year gap is the comparison that points to tighter supply.

Who it hits

Most small businesses do not pay the Henry Hub futures price directly. Their utility or gas marketer passes wholesale costs through over time. Businesses that lock in fixed-price supply contracts are a different case. Those quotes are built off the futures curve, so a higher futures price on the day they sign carries through the whole term.

The arithmetic is simple. For a business on a fixed-price contract, each 10-cent change per million Btu adds or removes $100 for every 1,000 million Btu it burns in a year. That is a hypothetical volume. Check your own bills for the figure.

The trades most exposed are the ones that burn gas all year, not just for heat. CheckThisBiz lists 30,325 independent laundromats and dry cleaners and 35,649 independent bakeries across the U.S., and both rely on gas dryers, boilers or ovens. For an owner with a supply contract coming up for renewal, the storage numbers are the week-to-week signal worth watching. A narrowing gap with last year points to firmer prices. A widening surplus over the five-year average points the other way.

What to watch

The next EIA storage report is due Oct. 1. Our markets page tracks natural gas and crude prices through the day.

Sources: U.S. Energy Information Administration; Seeking Alpha; The Wall Street Journal; business counts from CheckThisBiz. Differences are Chronicle calculations from EIA data. This is market information, not investment advice.