Survey calls for first US triple-digit natural gas storage injection of 2021

For the first time in a month, US natural gas storage fields likely added more than the five-year average for the week ended May 21 as the East and Midwest regions look to double week-over-week injection activity.

The US Energy Information Administration is expected to report a 107 Bcf injection for the week ended May 21, according to a survey of analysts by S&P Global Platts. It would be the first triple-digit injection of the year. Responses to the survey ranged from a 94 to 112 Bcf injection. The EIA plans to release its weekly storage report at 10:30 am ET on May 27.

At the regional level, the East is expected to see the sharpest increase on the week, with injections more than doubling to 24 Bcf from 11 Bcf the week before, while the Midwest is expected to see a 100% increase as well, to 28 Bcf from 14 Bcf, according to S&P Global Platts Analytics. The South Central and Mountain regions are expected to rise to a lesser degree, while the Pacific region is expected to see a drop in injection activity week over week.

A 107 Bcf injection would prove more than the five-year average build of 91 Bcf and last year's 105 Bcf addition. It would expand stocks to 2.207 Tcf. US storage would measure 71 Bcf below the five-year average, and the deficit to 2020 would contract slightly to 389 Bcf. It would be the first above-average injection in a month.

This trend of weaker-than-normal storage injections this season has resulted in a growing inventory deficit relative to historical averages, which widened to an 87 Bcf deficit as of week-ended May 14, a dramatic reversal from the 12 Bcf surplus seen just a month earlier.

The anticipated 107 Bcf storage build for the week ending May 21 is likely to be the sole triple-digit increase for the entire 2021 injection season, as forecasts for the week in progress and the week ahead point to a tighter market as hotter weather is expected to boost power burn demand, leaving less gas available to inject into storage.

This would be the first inventory build that's above the historical five-year average in over a month and might be the sole 100-plus Bcf storage build of the year. Strong export demand and tepid production levels have resulted in an underwhelming injection season thus far. With cooling degree days now starting to show up in a meaningful way, the outlook points to injections that should fall the mid-80 Bcf range this week and next, according to Platts Analytics.

Platts Analytics' supply and demand model expects an 82 Bcf injection for the week ending May 28, which would measure less than the five-year average of 96 Bcf. A slightly smaller injection is expected for the first week of June.

The NYMEX Henry Hub June contract contracted added 2 cents to $2.90/MMBtu during trading on May 25, which represents a 10-cent drop from one week prior.