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US natural gas storage rises 97 Bcf to 1.999 Tcf as NYMEX futures rebound


97 Bcf injection aligned with market expectation

Storage deficit hits widest yet in 2022 at 340 Bcf

NYMEX futures rebound to upper $8s/MMBtu

  • Author
  • J Robinson
  • Editor
  • Derek Sands
  • Commodity
  • Natural Gas

US natural gas in storage modestly widened its deficit to the five-year average in early June in a weekly stock build that was largely neutral to market expectations but still bullish for NYMEX gas futures.

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The US Energy Information Administration on June 9 reported a 97 Bcf injection to US inventories for the week ended June 3. The addition to stocks was closely aligned with S&P Global Commodity Insights' storage survey result, which called for an injection of 96 Bcf. The weekly build was also much closer to historical averages, just barely undershooting the year-ago injection of 98 Bcf and the five-year average of 100 Bcf in the corresponding week, data from the EIA showed.

As a result, US working gas inventories climbed to 1.999 Tcf, while the shortfall to 2021 widened to 398 Bcf, leaving stocks about 17% below the year-ago level of 2.397 Tcf. The inventory deficit to the prior five-year average also expanded to its widest yet this season, pushing stocks to 340 Bcf, or almost 15%, below the historical average of 2.339 Tcf.

Immediately following the EIA storage report's release, the Henry Hub July contract jumped about 25 cents to $8.45/MMBtu, followed by continued price gains throughout the morning and early afternoon that left the prompt-month contract just shy of $9/MMBtu at settlement, data from CME Group showed.

NYMEX rally

The sharp rebound in NYMEX gas prices on June 9 came following a prior-day and overnight selloff to the low-$8s, apparently sparked by news of an explosion at the Freeport LNG export facility in Texas.

On June 9, feedgas deliveries to the terminal were down for a second consecutive day to an estimated 235 MMcf/d. On June 8, deliveries to the terminal plunged below 400 MMcf/d as Freeport's three liquefaction trains were shut down for inspection and possible repair. During the prior week, feedgas deliveries to Freeport had averaged just under 2 Bcf/d, Platts Analytics data shows.

With feedgas demand from Freeport LNG offline, the additional 2 Bcf/d in gas supply could potentially be redirected to storage over the coming days or even weeks, temporarily loosening spot market supply and casting a shadow of uncertainty over the NYMEX futures rally.

Storage deficit

During the week ended June 3, rising temperatures across the Northeast, the central US and the Rockies fueled a combined drop of 3.1 Bcf/d in US residential-commercial and industrial gas demand. In all three regions, flows into inventory either matched or outpaced the prior five-year average for the week and were only partially offset by a weaker net injection in the South Central region where hotter weather fueled an increase gas-fired power demand.

For the week ending June 10, the upward revision to gas supply in the South Central region stemming from the recent shut-in at Freeport LNG could allow more of the region's supply to move into storage.

As of June 9, Platts Analytics storage model is now estimating a net injection to US inventory of 95 Bcf for the week in progress – up 11 Bcf from the model's weekly prediction on June 7.

Assuming the storage model estimate is accurate, the EIA's coming report would narrow the inventory deficit by 16 Bcf, potentially fueling a steep drop in NYMEX futures prices back toward the low-$8 or even upper-$7 range.