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US natural gas storage volumes increase nearly in line with five-year average

Highlights

Henry Hub balance-of-summer prices climb

Minuscule build likely for week in progress

US natural gas storage fields added 38 Bcf, just above an S&P Global Platts survey calling for a 37 Bcf gain, for the week ended April 16 as the remaining Henry Hub summer strip continues its recent climb.

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Storage inventories increased 38 Bcf to 1.883 Tcf for the week-ended April 16, the US Energy Information Administration reported April 22. The build barely missed the 37 Bcf addition expected by an S&P Global Platts survey of analysts, as well as the five-year average build of 37 Bcf, according to EIA data.

The injection measured well below the 61 Bcf build reported for the week prior, in part due to lower total US supply. The decline was mainly centered on an unexpected fall in production in the Southeast and Texas regions. Production in Texas alone fell by nearly 500 MMcf/d for the second week in a row, while Southeast output shed roughly 350 MMcf/d, according to Platts Analytics.

Downstream demand lurched higher across all sectors, with residential and commercial, industrial and power burn rising by more than 2 Bcf/d, while exports to Mexico rose by 1 Bcf/d.

Storage volumes now stand 251 Bcf, or 11.8%, less than the year-ago level of 2.134 Tcf and 12 Bcf, or 0.6%, more than the five-year average of 1.871 Tcf.

The NYMEX Henry Hub May contract added 6 cents to $2.76/MMBtu in trading following the release of the weekly storage report. The bullishness extended across the balance of summer as prices through October 2021 have risen by an average 6 cents.

S&P Global Platts Analytics' supply and demand model currently forecasts a meager 1 Bcf injection for the week ending April 23, which would measure 66 Bcf less than the five-year average.

Demand has seen large gains, particularly from the residential and commercial sector as colder weather is driving home heating demand, reversing seasonal declines in some areas. Meanwhile, power burn growth has continued, albeit at a slower pace than the week ended April 16, with demand from the power sector increasing by 700 MMcf/d week over week, or roughly half the rate from a week earlier.

The shift was driven by a blast of colder-than-normal temperatures across most of the US, which pushed up residential and commercial demand estimates in the three largest demand regions of the East, South Central and Midwest.