Hello again! I’m Jake Swart, and I am a Junior Broker at Daniels Trading. I’ve been interning at Daniels Trading for two summers and have been feverishly learning all there is to know about the futures market, especially the energy markets. I’ve discussed the focus of the EIA as well as their history in my first two articles that you can read here: Exploring Energies and the EIA: Introducing Jake Swart and Exploring Energies and the EIA: What is the EIA?
In this article, I will focus on the EIA’s Weekly Natural Gas Storage Report and Weekly Petroleum Status Report. As the names suggest, these reports are released once every week. The Natural Gas Storage Report is released every Thursday while the Weekly Petroleum Status Report is released every Wednesday.
The Natural Gas Storage Report chronicles the amount of ‘working gas’ that is currently in underground storage. Working gas refers to the natural gas that can be withdrawn from the storage facilities and utilized as needed. Underground storage facilities have the ability to house this working gas until it is needed. There are three different types of underground storage facilities for natural gas: oil and natural gas fields, aquifers, and salt cavern formations. While all three of these types of facilities can be utilized for storing natural gas, the most commonly used facilities here in the U.S. are the depleted oil and natural gas fields. The main reason that this is the most used type of underground storage facility is because they are easily accessible due to the large number of facilities there are around the country. There are approximately 400 underground storage facilities currently operating. The purpose of the Weekly Natural Gas Storage Report is to aggregate the end of week data of the amount (volume) of working gas that is stored in these underground facilities.
There are five different regions of underground storage facilities. The regions include the Pacific, Mountain, South Central, Midwest, and East. When the data is collected, it is then logged into the report at the individual regional levels and then the sum is recorded as the total volume in all the storage facilities for the country. The volume of natural gas that is held in the storage facilities is expressed in terms of billion cubic feet. The report includes the current week’s stocks (volume of natural gas in billion cubic feet), the previous week’s stocks, and the net change from the two weeks. Also included in the report are the stocks for each regional level on the same date a year ago as well as the 5-year average. These numbers are given as a historical context to be able to compare current levels and see if they are on track with the average or if they vary greatly. This can help in determining prices of natural gas because you are able to look at the price from a year ago, compare it to the stocks, and then look at the current year’s stocks and do some calculating as to what the difference in stocks could mean for the current price.
Another useful tool that is included in the report is a graph that chronicles the working gas in storage as compared to the 5-year maximum and minimum as well as the five year average. This graph helps provide a visual representation of the numbers presented so you can see exactly how the data from the current week/year stacks up with the previous years’ highs, lows, and averages. If this report is of interest to you, go in and take an in depth look at everything it provides here: http://ir.eia.gov/ngs/ngs.html.
If you’re looking to get information on crude oil and gasoline, the place to find it is in the Weekly Petroleum Status Report that comes out every Wednesday. You’ll come to find that this report is much denser than the Weekly Natural Gas Report. It is filled with information that details the stocks of gasoline, crude oil, and distillates and provides prices based on this information for all the different energies. In order to find this report, you just just visit the EIA website and look under the petroleum topic: http://www.eia.gov/petroleum/supply/weekly/. The data that is used to comprise this report is from the previous week ending with the preceding Friday at 7 am. This data is then taken and transformed into charts, such as the balance sheet, that organize the information in an easy to read and understandable document. If you’re more of a visual person, this report accommodates that as well. They take the information chronicled in the charts and put them into graphs that contain current year data as compared to the 5-year high/low range. There’s a brief roughly three-quarters page long highlights section at the beginning of the report, but otherwise, the rest is represented by charts and graphs.
My next post, I’ll go over seasonality of storage. Stay tuned!
THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.
THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.
TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.
YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.
GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.