US natural gas storage posts first injection of season, rises 26 Bcf to 1.4 Tcf

US natural gas storage fields posted the first build of the season, which was one week earlier than normal, as the remaining Henry Hub summer strip continued to climb during trading on March 31.

Storage fields injected 26 Bcf for the week ended March 25, according to data released by the US Energy Information Administration on March 31. The injection matched the 26 Bcf build expected by a survey of analysts from S&P Global Commodity Insights. However, it was a flip from the five-year average draw of 23 Bcf.

Working gas inventories increased to 1.415 Tcf for the week ended March 25, EIA data showed. US storage volumes stood 347 Bcf, or 20%, less than the year-ago level of 1.762 Tcf and 244 Bcf, or 15%, less than the five-year average of 1.659 Tcf.

The NYMEX Henry Hub May contract climbed 4 cents to $5.65/MMBtu following the EIA's storage report release March 31. The remaining summer strip, May through October, followed suit, tacked on 6 cents to $5.72/MMBtu. The 2022-23 winter strip, November through March, added 4 cents to $5.76/MMBtu.

Despite the early flip to injections, a forecast by S&P Global expects a 15 Bcf draw for the week ending April 1.

Weather forecast models are showing more unseasonably cold temperatures for western and eastern regions of the US over the course of the next two weeks as the calendar presses into the month of April.

Total US demand dipped below 96 Bcf/d for the first time since March 25, settling at 95.8 Bcf/d for March 31, according to S&P Global data. The decline was driven by average US temperatures rising to 55 degrees Fahrenheit, the highest since March 19.

Demand is forecast to rise slightly over the weekend to 98 Bcf/d. But for the week beginning April 4, total demand is forecast to continue to decline, nearing 90 Bcf/d by the end of the week.

After dropping below 94 Bcf/d for the first time since March 18, total US production continued to rebound on March 31, reaching 94.9 Bcf/d. Total March production has averaged 93.8 Bcf/d, 1.5 Bcf/d above February.

At the same time, production continued to grow in the prolific Permian. S&P Global sample data suggested that New Mexico Delaware has been a focal point of Permian growth, with the play's production sample 23% larger on average in March than it was one year ago, while the total Permian sample is 12% larger.

This summer, it is likely that Double E Pipeline will be increasingly utilized, as price premiums in the Southeast continue to draw more of the 1.6 Bcf/d of Permian production growth forecast throughout summer 2022.