US working natural gas volumes in underground storage rise by 70 Bcf: EIA

Denver — US natural gas volumes in storage increased roughly in line with the five-year average last week, prompting a dip across the board in Henry Hub futures, as similar additions loom for the weeks ahead.

Storage inventories increased by 70 Bcf to 3.525 Tcf for the week ended Sept. 4, the US Energy Information Administration reported the morning of Sept. 10.

The injection was more than an S&P Global Platts' survey of analysts calling for a 64 Bcf build. Responses to the survey ranged from an injection of 54 Bcf to 72 Bcf. The injection measured less than the 80 Bcf build reported during the same week last year but just above the five-year average gain of 68 Bcf, according to EIA data.

Storage volumes now stand 528 Bcf, or 17.6%, more than the year-ago level of 2.997 Tcf and 409 Bcf, or 13%, more than the five-year average of 3.116 Tcf.

The last remaining summer contract this year, October, has come under downward pressure in the last two weeks as supplies continue to rise amid flagging demand. The October NYMEX Henry Hub contract was trading around $2.39/MMBtu following the release. This represents a drop of nearly 20 cents from where it closed last Friday, and more than 30 cents lower than the peak of $2.71 it hit on Aug. 27.

The winter strip, November through March, has traded relatively steady around the $3.20/MMBtu level in the last several weeks but dipped slightly during Sept. 10 trading to $3.17/MMBtu.

The injection doubled the 35 Bcf injection estimate reported by the EIA for the week ended Aug. 28. Total supplies came in 800 MMcf/d lower on the week at an average 90.1 Bcf/d. After accounting for offsetting movements between onshore and offshore production volumes, the supply decline was driven by a 900 MMcf/d drop in net Canadian imports, according to Platts Analytics.

Total demand suffered sharper losses, with the gas-fired power sector shedding an average of 5 Bcf/d from the week earlier.

S&P Global Platts Analytics' supply and demand model currently forecasts a 61 Bcf injection for the week ending Sept. 11. This would lower the surplus to the five-year average by 16 Bcf as about nine net weekly injections remain before the flip to the winter withdrawal season.

Offshore production and LNG feedgas continue to make steady gains from the losses related to Hurricane Laura. However, cooler weather and falling power burn were the main factors contributing to bearish sample injections in the US Gulf Coast this week.