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Denver — Stocks to rise 108 Bcf: survey

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Less supply to draw down build from week prior

The US Energy Information Administration is expected to report a 108 Bcf injection for the week ended June 7, according to a survey of analysts by S&P Global Platts, as the deficit versus the five-year average continues to plunge and Henry Hub futures remain depressed.

Responses to the survey ranged for an injection of 100 Bcf to 121 Bcf. The EIA plans to release its weekly storage report on Thursday at 10:30 am EDT.

A 108 Bcf injection would be more than the 95 Bcf build in the corresponding week last year, as well as the five-year average injection of 92 Bcf.

An injection within expectations would increase stocks to 2.094 Tcf. The deficit versus the five-year average would shrink to 224 Bcf and the surplus to last year would expand to 195 Bcf.

The build looks to be less than the week prior, when the EIA reported a 119 Bcf build, due a drop in total supply.

The streak of bearish storage reports that lasted all spring shows little sign of slowing for the first week of June, which is gearing up to exceed the five-year average with another triple-digit injection. While power burn gains continue to outpace residential and commercial losses across the US, the week-ending June 7 saw additional tightness from one of the largest week-over-week supply drops since freeze-off season, according to S&P Global Platts Analytics.

On average, temperatures were largely flat week over week, with more significant warming in the less densely populated regions unable to move the needle for the US as a whole. Texas was the most significant driver of week-over-week tightness, with modeled production estimates dropping 3 Bcf and power burn increasing 4 Bcf. The Northeast and Rockies also lost 3 Bcf and 2 Bcf of production each, which was only partially offset by some gains in the Southeast cell region.

BOOMING BUILDS

The average weekly injection has totaled 107.5 Bcf/d since late April and added 645 Bcf to underground storage over the same timeframe. By comparison, stocks have increased by an average of 518 Bcf over the past five years. With the final injection of the season ending on the week ending November 8, as many as 22 more builds remain before the switch to heating season.

An early forecast by Platts Analytics shows a lower injection of 96 Bcf for the week ending June 14, which would still prove to be 10 Bcf more than the five-year average.

As a result of the string of above-average builds, NYMEX Henry Hub futures have tumbled over the injection season. The prompt month averaged $2.70/MMBtu during the week of the year's first storage build in late March. It is averaging $2.36/MMBtu during the week in progress.

However, with well completions slowing in the Northeast, and unfavorable gas prices in the Permian basin, the recent stockpiling is not likely to persist much longer, according to Platts Analytics. US balances are forecasts to tighten through October as production growth begins to lag the ramp up in exports, supporting prices above the summer strip.

-- Brandon Evans, bevans@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com