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US gas demand deflates, supply holds flat in week to Aug. 2

Natural gas demand in the United States was weaker amid diminished power burn during the week ended Aug. 2, while supply was flat on the back of steady production, the U.S. Energy Information Administration said in its latest "Natural Gas Weekly Update" released Aug. 3.

Total U.S. gas consumption was off 3% week on week, from 62.1 Bcf/d to 60.1 Bcf/d. Power-sector demand drove the decline as it slid from 37.6 Bcf/d in the week ago to 34.6 Bcf/d in the current report period to reflect an 8% reduction week over week. Industrial-sector consumption was unchanged relative to the prior-week level at an average at 19.7 Bcf/d, while residential/commercial-sector demand logged a 21% increase over the same period as it grew from 4.9 Bcf/d to 5.9 Bcf/d.

Natural gas exports to Mexico were up 4% week over week, from 3.6 Bcf/d to 3.7 Bcf/d. Natural gas pipeline flows to the Sabine Pass liquefaction terminal during the week in review averaged 2.1 Bcf/d, with four vessels carrying a combined 14.7 Bcf of LNG seen to have left the terminal from July 27 to Aug. 2.

Overall U.S. gas supply averaged at the same level as the prior report week at 78.7 Bcf/d. Dry production remained constant week on week at an average at 72.8 Bcf/d, while net imports from Canada notched a 2% slump over the same period as the average deflated from 6.1 Bcf/d to 6.0 Bcf/d but ultimately remained a small contributor to total supply.

In terms of inventories, the latest storage data from the EIA outlined a net 20-Bcf injection for the week ended July 28 that compared with a 44-Bcf five-year average build and a 3-Bcf withdrawal seen in the corresponding week in 2016, as predominantly warmer weather across the contiguous U.S. that bolstered cooling demand for natural gas was once again seen to have allowed for the smaller-than-average build. Total working gas stocks currently sit at 3,010 Bcf, or 279 Bcf below the year-ago level and 87 Bcf above the five-year average of 2,923 Bcf.

The latest storage report week marks the first time since the start of the current refill season that inventories topped 3,000 Bcf, a level last seen on Jan. 6. It also marked the third time that working gas storage breached the same threshold this early in the refill season, though all three occurrences were in the past five years. Natural gas inventories reached 3,006 Bcf on June 15, 2012, and 3,041 Bcf on June 10, 2016. Prior to 2012, working gas stocks typically did not pass the 3,000-Bcf mark until September.

Net storage injections from the traditional start of the refill season on March 31 through the latest inventory report week have totaled 959 Bcf, versus the five-year average of 1,137 Bcf over the same period and the year-ago figure of 811 Bcf.