Denver — After weeks of the US Energy Information Administration reporting storage estimates larger than the market expected the agency posted a net injection of only 66 Bcf for the week-ended Sept. 18, providing some upward momentum for Henry Hub prices which have been cascading over the past week.
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The amount of natural gas in US underground storage facilities increased by 66 Bcf to 3.680 Tcf in the week ended Sept. 18, according to data released by the US Energy Information Administration Sept. 24.
The injection was much less than an S&P Global Platts' survey of analysts calling for a 77 Bcf build. The estimate was also a shocking departure from the prior week's build of 89 Bcf.
The EIA's Weekly Natural Gas Storage Report is a survey, not a census, and the many storm-related logistical difficulties in the South Central region for the first half of September potentially caused sampling errors or discrepancies between the storage fields in the EIA's sampling frame and those outside of it, according to S&P Global Platts Analytics. It is likely the EIA overestimated net injections for the week-ended Sept. 11.
The injection measured less than the 97 Bcf build reported during the same week last year as well as the five-year average gain of 80 Bcf, according to EIA data. Storage volumes now stand 504 Bcf, or 16%, more than the year-ago level of 3.176 Tcf and 407 Bcf, or 12.4%, more than the five-year average of 3.273 Tcf.
After briefly trading up 21 cents the morning of Sept. 24, the prompt-month NYMEX Henry Hub contract settled back down to a roughly 9 cent/MMBtu gain day on day, driven by a much smaller-than-anticipated storage build reported by the EIA. The price strength did not extend far into the strip, with November trading just 2 cents higher, and the rest of the winter contracts through March 2021 trading about 1.5 cents higher on the day.
Platts Analytics' supply and demand model currently forecasts a 67 Bcf injection for the week ending Sept. 25. This would lower the surplus to the five-year average by 11 Bcf as about seven net injections remain before the flip to the winter withdrawal season. Total supplies are trending 1.2 Bcf/d lower this week compared with the week ended Sept. 18, driven by a 900 MMcf/d drop in onshore production, the vast majority of which stems from the Northeast region, where output has slid nearly 2 Bcf/d in the past few days due to weak prices and infrastructure constraints.
The ICE end-of-season EIA inventory estimate was 5 Bcf lower on Sept. 24, with markets narrowing in on an expected 3.97 Tcf end-of-summer carryout to begin the winter demand season in November. This would be about 250 Bcf more than the five-year average of 3.75 Tcf.