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US natural gas storage volume rises by 87 Bcf to 3.606 Tcf: EIA


Henry Hub winter strip tests recent lows

End-of-season forecast at 3.749 Tcf

Houston — US working natural gas volumes in underground storage added 87 Bcf last week, increasing by more than the five-year average for the 13th consecutive week, as the NYMEX Henry Hub winter strip trades near two-month lows.

Storage inventories increased to 3.606 Tcf for the week ended October 18, the US Energy Information Administration reported Thursday morning.

The injection was less than an S&P Global Platts' survey of analysts calling for a 92 Bcf addition. Survey responses ranged for an injection of 80 Bcf to 101 Bcf.

The build was more than the 62 Bcf injection reported during the corresponding week in 2018 as well as the five-year average addition of 73 Bcf, according to EIA data. As a result, stocks were 519 Bcf, or 16.8%, more than the year-ago level of 3.087 Tcf and 28 Bcf, or 0.8%, more than the five-year average of 3.578 Tcf.

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The NYMEX Henry Hub November contract added 1.7 cents to $2.299/MMBtu following the announcement. The winter strip, November through March, gained less than 1 cent to average $2.434/MMBtu, down 8 cents from the week prior.

The $2.43/MMBtu price marker has proved to be a low-side support level. Prices bottomed out there on three previous occasions in the last two months following higher trading. Once in late August and twice in the first half of October the contract strip traded down to about $2.43 but that was the lowest it went.

Still, the fact prices are within sight of two-month lows highlights the fact each of the previous rallies were short-lived, and moments of bullish sentiment are quickly undone against a near-term, structurally bearish supply-demand backdrop.

US balances are trending tighter by about 0.8 Bcf/d for the week in progress, as notable gains in onshore production still fall short of a boost in demand driven by higher home heating loads, according to S&P Global Platts Analytics.

A forecast by Platts Analytics' supply and demand model has storage volumes increasing by 83 Bcf for the week ending October 25, which would increase the surplus to the five-year average to 46 Bcf with at least two more net injections remaining before withdrawal season begins.

Forecasts for the end-of-season peak before the flip to net withdrawals have continued to increase throughout the injection season as supply continued to outpace demand. The most recent estimate by Platts Analytics now has storage peaking at 3.749 Tcf.

Region Current Week Stocks Bcf Previous Week Stocks Bcf Net Change Year ago Bcf Year ago change % 5-year average Bcf 5-year average change %
East 898 880 18 823 9.1 886 1.4
Midwest 1069 1044 25 930 14.9 1034 3.4
Mountain 208 205 3 177 17.5 209 -0.5
Pacific 297 296 1 262 13.4 322 -7.8
South Central 1134 1093 41 893 27 1129 0.4
Total 3606 3519 87 3087 16.8 3578 0.8

-- Brandon Evans,

-- Edited by Joe Fisher,