US working natural gas storage volumes rise by 65 Bcf on week: EIA

Denver — One week after it reported a much larger injection than the market expected, the US Energy Information Administration estimated a smaller-than-expected addition to US storage fields for the week ended June 26, boosting the remaining Henry Hub summer strip by 4 cents, as analysts struggle to nail down weekly injections during this period of mid-summer demand and wavering coronavirus restrictions.

The amount of natural gas in US underground storage facilities increased by 65 Bcf to 3.077 Tcf, according to US Energy Information Administration data released July 2.

The injection was much smaller than the consensus expectations of analysts surveyed by S&P Global Platts, which called for a 77 Bcf build. Responses to the survey ranged from an injection of 66 Bcf to one of 85 Bcf. The injection was also smaller than the 92 Bcf build reported during the same week a year earlier, but it matched the five-year average increase of 65 Bcf, according to EIA data.

The injection was nearly 50% smaller than the build reported the week prior as warmer temperatures boosted gas-fired power generation and LNG feedgas deliveries showed some signs of recovery. Power burn estimates ramped up 5.9 Bcf/d while feedgas demand increased by 300 MMcf/d, according to S&P Global Platts Analytics. However, residential and commercial as well as industrial demand, fell by a combined 800 MMcf/d week over week.

Storage volumes now stand 712 Bcf, or 30%, above the year-ago level of 2.365 Tcf and 466 Bcf, or 18%, higher than the five-year average of 2.611 Tcf.

The NYMEX Henry Hub balance-of-summer contract, August through October, increased 5 cents to $1.78/MMBtu in trading following the release of the data. The ICE end-of-season storage contract is treading close to the 4 Tcf mark as nearly all regions are on track for high storage fills by the end of the season, in some cases possibly prompting a drop in supplies by late summer as caverns reach their upper limits.

S&P Global Platts Analytics' supply and demand model currently expects a 59 Bcf injection for the week ending July 3, which would be 9 Bcf below the five-year average. Fundamentals have seen a continued tightening in supply and demand balances by an additional 1.8 Bcf/d compared with the week prior. Total supplies have held essentially flat, but warmer weather has contributed roughly 2.2 Bcf/d of incremental demand from the power sector as the market enters the peak months of the cooling season.