US natural gas volumes in storage likely increases by more than 100 Bcf: survey

US natural gas inventories likely increased by approximately 50% more than the five-year average last week as gas-fired power generation fell on cooler temperatures and LNG feedgas deliveries fell for the sixth consecutive week amid suppressed global demand stemming from the coronavirus.

The US Energy Information Administration is expected to report a 107 Bcf injection for the week ended June 19, according to a survey of analysts by S&P Global Platts. Responses to the survey ranged from an injection of 88 Bcf to 120 Bcf.

A 107 Bcf injection would be more than the 103 Bcf addition in the corresponding week last year and well above the five-year average build of 73 Bcf. A build within expectations would increase stocks to 2.999 Tcf. The surplus to the five-year average would expand to 453 Bcf, and the overhang to 2019 would shift slightly to 726 Bcf.

After the prior week's bearish storage report of an 85 Bcf injection from the EIA, cooler weather across the East and Midwestern US will likely push this injection near 110 Bcf, S&P Global Platts Analytics. Offshore production rebounded after Tropical Storm Cristobal. US onshore production in the Southeast recovered from the declines seen at the start of the month due to Cristobal, increasing by 600 MMcf/d week over week.

LNG feedgas deliveries fell for the sixth consecutive week for the week ended June 19, hitting the lowest level since last January at 3.7 Bcf/d. With this summer seeing additional cancellations of cargoes by Asian buyers. So far, more than 40 LNG cargoes scheduled from US LNG export terminals this August are now cancelled. Platts Analytics is forecasting feedgas deliveries to average 3.1 Bcf/d in July and 3.4 Bcf/d in August this year.

The massive injection is expected to send Lower 48 inventories at or above the 3 Tcf mark, a level typically not hit until August, adding to the massive overhang that will weigh on prices at Henry Hub through the summer.

The NYMEX Henry Hub July contract dropped 3.6 cents to $1.63/MMBtu during afternoon trading on Tuesday.

Platts Analytics' supply and demand model currently expects a 79 Bcf injection for the week ending June 26, which would grow the excess to the five-year average by 14 Bcf.

The EIA plans to release its weekly storage report for the week ended June 19 at 10:30 am ET on June 25.