US natural gas stocks increased by single digits as the East region reported a withdrawal, but at least one more net injection remains while global gas demand keeps domestic prices much higher than normal to start the heating season.
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Storage fields injected 7 Bcf for the week ended Nov. 5, according to data released by the US Energy Information Administration on Nov. 10. It was much less than the 15 Bcf build expected by a survey of analysts by S&P Global Platts.
The 7 Bcf build for the week was also lower than the five-year average injection of 25 Bcf, ending the eight-week streak of larger-than-normal storage injections that began in early September and reduced the storage inventory deficit from minus 231 Bcf to minus 101 Bcf by late October. The inventory deficit has widened once again.
Working gas inventories increased to 3.618 Tcf. US storage now stands 308 Bcf, or 7.8%, less than the year-ago level of 3.926 Tcf and 119 Bcf, or 3.2%, less than the five-year average of 3.737 Tcf.
US supply and demand balances tightened sharply during the latest storage week, with strong gains in heating demand pushing the market to be nearly 7 Bcf/d tighter compared with the week before, even amid rising production, according to Platts Analytics.
Total supplies for the week averaged 700 MMcf/d higher on strengthening output in the Southeast and Texas cell regions. Downstream, total demand increased by about 7.4 Bcf/d as residential-commercial demand picked up 7.1 Bcf/d week over week and industrial demand added 1.1 Bcf/d over the same period, helping soften the blow of a roughly 800 MMcf/d decline in pipeline flows to Mexico.
The NYMEX Henry Hub December contract fell 8 cents to $4.90/MMBtu, in trading following the release of the EIA's storage report. The remaining winter strip, December through March, shed 8 cents as well.
These latest price developments mark a dramatic shift from just two weeks ago, when the November 2021 Henry Hub contract settled at $6.20/MMBtu. Early cold weather in November this year has been displaced by milder temperatures, and weather forecasts continue to show sustained (relative) warmth possibly through the end of the month, likely paving the way for a prolonged injection season as production has also been rising since the beginning of the month.
Platts Analytics' supply and demand model currently forecasts a 20 Bcf build for the week ending Nov. 12. This would stand in contrast to the 12 Bcf withdrawal reported on average over the past half decade.