US working natural gas volumes in underground storage increase 55 Bcf: EIA

US natural gas inventories rose nearly in line with the five-year average for the week ended July 9, doing little to erase the storage deficit, as Henry Hub futures fell slightly.

Storage inventories increased 55 Bcf to 2.629 Tcf for the week ended July 9, the US Energy Information Administration reported July 15.

The build was more than the 46 Bcf injection an S&P Global Platts survey of analysts expected and just above the five-year average build of 54 Bcf, according to EIA data.

Storage volumes now stand 543 Bcf, or 17.1%, below the year-ago level of 3.172 Tcf, and 189 Bcf, or 6.7%, below the five-year average of 2.818 Tcf.

The NYMEX Henry Hub August contract dipped 4 cents to $3.62/MMBtu July 15, nearly $2/MMBtu above where the prompt month was valued last year at this time as fundamentals have demonstrated significant change. US dry production is down 700 MMcf/d so far this year, while total demand rose 3.9 Bcf/d year to date, according to Platts Analytics. LNG exports have fueled 3.4 Bcf/d of the rise in demand.

Platts Analytics' supply-and-demand model currently forecasts a 38 Bcf injection for the week ending July 16, which would measure only 2 Bcf more than the five-year average, doing little to erase the deficit as the injection season nears the halfway point.

Midwest injections have increased by 2.5 Bcf while East injections fell by a similar amount for the week ending July 16. The largest change has come from the Pacific region, where pipeline sample data indicate a possible flip to a net withdrawal, likely the result of sustained, hotter-than-normal weather affecting the West Coast.

The current Platts Analytics end-of-season forecast has stocks peaking at 3.5 Tcf, 400 Bcf below last year's storage peak.

In response to below-normal volumes in storage, shippers, local distribution companies, and end-users will likely boost injection activity over the next few months to build up adequate supply by the time the heating season arrives in early November. But this might prove difficult in the short term as the US enters the peak demand period of the summer.