Denver — US working natural gas volumes in underground storage rose 34 Bcf last week, increasing by less than the five-year average for the first time in more than three months with a chance for a small net injection before the withdrawal season begins.
Storage inventories increased to 3.729 Tcf for the week ended November 1, the US Energy Information Administration reported Thursday morning.
The injection was less than an S&P Global Platts' survey of analysts calling for a 39 Bcf addition. Survey responses ranged for an injection of 31 Bcf to 45 Bcf.
The build was less than the 63 Bcf injection reported during the corresponding week in 2018 as well as the five-year average addition of 57 Bcf, according to EIA data. As a result, stocks were 530 Bcf, or 16.6%, more than the year-ago level of 3.199 Tcf and 29 Bcf, or 0.8%, more than the five-year average of 3.7 Tcf.
This week marks the first bullish storage report in 14 weeks, as a colder-than-normal end of injection season resulted in a heating demand spike.
The NYMEX December gas futures contract added 3 cents to $2.86/MMBtu following the announcement. The remaining winter strip, December through March, gained 1.9 cents to average $2.83/MMBtu. However, by afternoon trading, they had dropped by 6 cents and 5.5 cents, respectively.
Changes in fundamentals for the week ending November 8 have mirrored movements from the week before, with supply holding steady while demand increases on colder temperatures. Total supplies are averaging 96.5 Bcf/d on a 0.5 Bcf/d increase this week, split by slightly higher onshore production and Canadian imports, according to S&P Global Platts Analytics.
Downstream, demand is up another 4.5 Bcf/d overall, reaching an average 94.2 Bcf/d and moving closer towards parity with supply. Most of the demand gains this week are from the Northeast where residential-commercial demand is up 4 Bcf/d alone.
On Wednesday, total US demand broke 100 Bcf/d, driven mainly by the Midwest region as average temperatures fell below freezing. Total demand is forecast to push higher heading into the weekend, which will likely continue to pressure prices as total US production remains at just over 90 Bcf/d.
A forecast by Platts Analytics' supply-and-demand model has storage volumes increasing by 9 Bcf for the week ending November 8, which will likely be the final net injection before withdrawal season begins. If so, stocks will peak at 3.746 Tcf, well below the five-year maximum of 4.047 Tcf, which occurred in November 2016.
--Brandon Evans, bevans@spglobal.com
--Edited by Debiprasad Nayak, debiprasad.nayak@spglobal.com