US working natural gas volumes in underground storage rise by 46 Bcf: EIA

  • Oct 17, 2020
  • Investing

US natural gas injections into storage the week ended Oct. 9 increased by less than half the volume reported during the same week one year prior as weaker Henry Hub prices prompted coal-to-gas switching and stronger residential and commercial demand.

Storage inventories increased by 46 Bcf to 3.877 Tcf for the week, the US Energy Information Administration reported the morning of Oct. 15.

The injection was less than an S&P Global Platts’ survey of analysts calling for a 50 Bcf build. The injection measured much less than the five-year average gain of 87 Bcf, according to EIA data.

The 41 Bcf drop in the surplus marked the largest reduction since January as the prolonged weakness in US production, combined with the return of both heating demand and LNG exports, begin to tighten domestic gas markets through the end of the year.

Storage volumes stood at 388 Bcf, or 11% more than 3.489 Tcf a year earlier; and 353 Bcf, or 10%, more than the five-year average of 3.524 Tcf.

Total US demand increased by roughly 3.8 Bcf/d on the week to 85.2 Bcf/d, led by a combined 2.8 Bcf/d increase in residential-commercial demand in the East and Midwest regions on colder weather, according to Platts Analytics. Demand was further bolstered by an uptick in LNG feedgas deliveries along the Gulf Cost.

Upstream, total supply slipped 200 MMcf/d week on week as onshore and offshore production fell almost 1 Bcf/d, though an uptick in net Canadian imports helped minimize the drop in supply. The approach of Hurricane Delta in the week ended Oct. 10 prompted most Gulf of Mexico operators to shut in production.

The NYMEX Henry Hub November contract leaped 14 cents to $2.77/MMBtu in trading following the release of the weekly storage report. The December-through-March contract strip increased 6 cents on average to $3.31/MMBtu. ICE end-of-season storage peak inventory trades were at 3.94 Tcf after spending much of the past three months trading above 4 Tcf.

Platts Analytics’ supply and demand model currently forecasts a 48 Bcf injection for the week ending Oct. 16. This would lower the surplus to the five-year average by 27 Bcf. Sample storage injections for the week in progress increased by 1 Bcf week over week as US balances flicker in the middle ground between waning power burn and waxing res-comm demand.

Total supply has averaged 1.4 Bcf/d lower on the week at an average of 89.4 Bcf/d, with the offshore production sector posting a 500 MMcf/d dip due to Hurricane Delta. However, South Central demand has proven unexpectedly buoyant in the wake of Hurricane Delta. As a result, depleted field injections fell while the US Gulf Coast salt dome sample flipped from a net injection of 1 Bcf to a net draw of less than 100 MMcf/d week over week.