Learn 100% online from anywhere in the world. Enroll today!

Natural Gas Storage Indicator (EIA Report)

An estimate of working gas in storage at both the national and regional levels

What is the Natural Gas Storage Indicator (EIA Report)?

The Natural Gas Storage Indicator is an estimate of working gas in storage at both the national and regional levels, as reported by the U.S. Energy Information Administration (EIA). The EIA Weekly Natural Gas Storage Report is released at 10:30 a.m. EST on Thursday every week. The indicator provides an estimated net change in the inventory levels of natural gas, which is significant to natural gas traders.

 

Natural Gas Storage Indicator

 

The weekly estimated natural gas storage volumes were initially reported by the American Gas Association (AGA) from 1994 to 2001. The EIA then started to report the Natural Gas Storage Indicator in 2002.

 

Summary

  • The Natural Gas Storage Indicator (the Weekly Natural Gas Storage Report) estimates the working gas volumes held in underground reservoirs at the U.S. national level and regional level.
  • Working gas refers to the volume of natural gas that is available to the market. It is equal to the total gas in storage minus base gas.
  • The Energy Information Administration (EIA) is a U.S. government agency responsible for collecting, analyzing, and forecasting energy data.

 

Breaking Down the Natural Gas Storage Indicator

The Natural Gas Storage Indicator provides estimates of the working gas volumes held in the U.S. underground reservoirs. The gas volumes are measured in the unit of billion cubic feet (Bcf) and reported on a weekly basis. Underground storage reservoirs are the most important form of gas storage.

There are three major types of underground reservoirs – depleted gas reservoir, aquifer reservoir, and salt formation. The natural gas stored in the underground storage facilities can be classified into base gas and working gas. The base gas refers to the volume of permanent storage. The working gas refers to the volume of natural gas that is available to the market and is equal to the total gas in storage minus the base gas.

The working gas volume is estimated at the U.S. national level (lower 48 states) and the regional level. The regions are classified into the East, Midwest, Mountain, Pacific, and South-Central. The South-Central region is further classified into salt and non-salt areas.

The storage in salt areas is usually more expensive than that in the non-salt areas, which makes it necessary for the EIA to distinguish the two categories. Generally, the South-Central region (especially non-salt) keeps the highest level of stocks, and the Mountain region holds the lowest.

The working gas volumes in storage are estimated based on the survey data collected from a set of sample underground storage facilities. Therefore, the EIA also releases the coefficients of variation for stocks and standard errors for net change together with the indicator.

 

The Market Impact of Natural Gas Storage Indicator

The net change in the inventory levels of natural gas is determined by the volumes of withdrawals and injections. Unexpected changes in withdrawal and injection volumes might significantly impact the price of natural gas. Hence, natural gas traders use the Natural Gas Storage Indicator as important information to make trading decisions.

An unexpected increase in gas inventories can be a result of extra injections (supply) or reduced withdrawals (demand), which might lead to lower gas prices, as traders are bearish on the gas market. A lower-than-expected increase or fall in inventories might imply a stronger demand for natural gas with increasing withdrawals. The traders will be bullish in the gas prices as a result. For example, an unexpectedly cold winter increases the use of heating, and thus boosts the demand as well as the prices of natural gas.

 

What is the Energy Information Administration (EIA)?

The Energy Information Administration (EIA) is a U.S. government agency responsible for impartially and independently collecting, analyzing, and forecasting energy data. It was established under the Department of Energy Organization Act of 1977.

In addition to the Weekly Natural Gas Storage Report, the EIA also releases other energy-related reports, e.g., the Weekly Petroleum Status Report, Weekly Coal Production Report, and Gasoline and Diesel Fuel Updates. The agency’s reports provide information about the production, consumption, imports/exports, reserves, and prices of various energy sources. Reports are released on a daily, weekly, monthly, and annual basis.

According to the EIA Information Quality Guidelines, the federal agency ensures the objectivity, utility, and integrity of the information that it releases. It also aims for transparency and reproducibility for influential information. The standards make the Natural Gas Storage Indicator a reliable resource for gas traders to estimate gas prices and make trading decisions.

 

More Resources

CFI offers the Certified Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following resources will be helpful:

  • Oil and Gas Primer
  • North Sea Brent Crude
  • Guide to Commodity Trading
  • Non-Renewable Resource

Financial Analyst Certification

Become a certified Financial Modeling and Valuation Analyst (FMVA)® by completing CFI’s online financial modeling classes and training program!