Analysts expect 70 Bcf US gas storage injection as above-average builds continue

In a stark year-over-year turnaround, analysts expect US natural gas storage fields added 70 Bcf compared to last year's 27 Bcf draw, with a forecast showing injections extending at least until mid-November.

The US Energy Information Administration is expected to report a 70 Bcf injection for the week ended Oct. 29, according to a survey of analysts by S&P Global Platts. Responses to the survey ranged from a 63 to 78 Bcf injection. The EIA plans to release its weekly storage report on Nov. 4 at 10:30 am ET.

A 70 Bcf injection would nearly double the five-year average build of 38 Bcf and stand in stark contrast to the 27 Bcf withdrawal during the corresponding week in 2020. It would also be the eight consecutive injection measuring more than the five-year average, according to EIA data.

It would expand stocks to 3.618 Tcf. The deficit to the five-year average and 2020 would decline to 94 Bcf and 306 Bcf, respectively.

The deficit gap has closed over the past three months. In mid-September, stocks were 595 Bcf less than last year and 231 Bcf below 2020 volumes. An uptick in production has helped. Production averaged about 90 Bcf/d for September, according to Platts Analytics. It crested 93 Bcf/d on Nov. 2. Total US production averaged 90.9 Bcf/d in October, a 1.25 Bcf/d increase from September. In October, Southeast and Texas production averaged 35.35 Bcf/d, an increase of 1.46 Bcf/d from September accounting for all the US production gains on the month and offsetting some small production declines in the Midwest and Rockies.

The recent storage volumes stand in contrast with earlier injection-season trends, which were generally marked by continually smaller-than-normal injections into storage due to heightened export demand and fledgling production. Markets turned a corner in late August when Hurricane Ida struck the Gulf Coast region. It affected supply and demand fundamentals in the area as LNG exports essentially continued without a hiccup while industrial demand, typically harder to track, took a heavy blow.

It also marked a time when production appears to ramp up at scale, in areas like Texas and the Southeast, which combined with lower demand to tip the overall market balance much longer. Since then, the last two months have seen above-average inventory builds. This year's injection season looks poised to continue until at least halfway through November.

The NYMEX Henry Hub December contract leaped 35 cents during the trade day on Nov. 2 at $5.54/MMBtu. The remaining winter strip, January through March, added 28 cents $5.42/MMBtu.

Platts Analytics' supply and demand model expects a 24 Bcf injection for the week ending Nov. 5, which would measure in line with the five-year average build of 25 Bcf. The following week shows a 26 Bcf build compared to the average draw of 12 Bcf as the injection season lingers.