US working natural gas volumes in underground storage rise 45 Bcf: EIA

Denver — US natural gas stocks increased by 45 Bcf last week, which matched analysts' expectations, as storm-related production declines in the Gulf of Mexico shrink the build for the week in progress, prompting gains across the board for Henry Hub futures.

US natural gas inventories increased to 3.420 Tcf for the week ended Aug. 21, US Energy Information Administration data showed the morning of Aug. 27.

The injection matched an S&P Global Platts' survey of analysts calling for a 45 Bcf build. Responses to the survey ranged from an injection of 37 Bcf to 58 Bcf. The injection measured less than the 60 Bcf build reported during the same week in 2019, as well as the five-year average gain of 49 Bcf, according to EIA data.

Storage volumes stood at 580 Bcf, or 20.4%, more than the year-ago level of 2.840 Tcf; and 438 Bcf, or 15%, more than the five-year average of 2.982 Tcf

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The injection matched an S&P Global Platts' survey of analysts calling for a 45 Bcf build. Responses to the survey ranged from an injection of 37 Bcf to 58 Bcf. The injection measured less than the 60 Bcf build reported during the same week last year as well as the five-year average gain of 49, according to EIA data.

Supply and demand balances were largely similar to the week before, when a 43 Bcf addition was estimated, as both sides fell by roughly the same amount. Total supplies were down 900 MMcf/d for an average 91.8 Bcf/d, led by a 700 MMcf/d drop in onshore production. According to A&P Global Platts Analytics. Downstream, total demand was also lower, falling 700 MMcf/d from the week before, led by a drop in power generation demand, which fell 1.4 Bcf/d on the week.

The NYMEX Henry Hub September contract jumped 12 cents to $2.57/MMBtu in trading following the release of the weekly storage report. It represents the highest the prompt-month contract has reached since November 2019. The winter strip, November through March, priced about 8 cents higher at $3.16/MMBtu, extending this month's price gains to nearly $1/MMBtu across the nearby contract strips.

Platts Analytics' supply and demand model forecast a 30 Bcf injection for the week ending Aug. 28. This would lower the surplus to the five-year average by 36 Bcf as storms in the Gulf of Mexico restrict offshore production.

A 1.6 Bcf/d drop in offshore Gulf of Mexico production coupled with a 900 MMcf/d drop in LNG feedgas demand, both of which are linked to storm activity. The storms may further disrupt demand, leading to looser balances on the week.

Storage injections also declined for the week in progress, with sample fields across the Lower 48 injecting 27% less gas than last week, dropping from 15 to 11 Bcf. Tighter sample injections were focused in the East and Midwest storage regions, where warmer temperatures pushed up power burn demand week over week.

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