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US working natural gas volumes in underground storage increase by 93 Bcf: EIA

Highlights

Power burn demand drives down build

Tropical Storm Cristobal knocks out output

Denver — US natural gas storage inventories increased by 93 Bcf for the week ended June 5, the US Energy Information Administration reported June 11, as power burn demand offset continued declines in LNG export demand.

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The injection was just below an S&P Global Platts' survey of analysts calling for a 95 Bcf build. Responses to the survey ranged from injections of 84 Bcf to 106 Bcf. The injection measured below the 107 Bcf build reported during the same week a year ago and the five-year average build of 94 Bcf, according to EIA data.

At 2.807 Tcf, storage volumes now stand 748 Bcf, or 36%, more than the year-ago level of 2.059 Tcf, and 421 Bcf, or 17.6%, more than the five-year average of 2.386 Tcf.

The weekly injection total was the first below triple digits since mid-May. US balances trended tighter as small gains across all supply sectors outmatched gains in gas-fired power generation demand, according to S&P Global Platts Analytics data.

Total supplies rose by 600 MMcf/d to average 90.9 Bcf/d over the period, led by a combined 300 MMcf/d increase in onshore and offshore production, as well as nominal gains in Canadian imports. Downstream, demand changes were mixed, as LNG feedgas demand continued to slide, falling 900 MMcf/d week on week. Power burn demand increased by 3.1 Bcf/d, lifting total US demand 2.2 Bcf/d higher overall.

LNG feedgas demand started out 2020 setting record highs, nearing 9 Bcf/d, but the softened global demand picture has cut feedgas deliveries in half. After the onset of the coronavirus, Platts Analytics' forecast cut 3 Bcf/d of LNG exports between June and October.

While exports have provided a new outlet for the abundance of US gas over the last few years, the uncertainty from LNG demand has reflected the trade-offs that come from bursting the North American natural gas bubble, which has opened up domestic markets to new levels of global volatility.

The NYMEX Henry Hub July contract rose 1 cent to $1.79/MMBtu in trading following the release of the weekly storage report. Henry Hub balance-of-summer prices were trading mostly flat at an average of $1.90/MMBtu, while the winter strip softened slightly, dipping 1 cent to $2.80/MMBtu from November through March. The massive spreads between summer and winter will likely continue to encourage a high rate of storage injections through the balance of summer.

Platts Analytics' supply-and-demand model currently expects an 85 Bcf injection for the week ending June 12, which would be in line with the five-year average. Lower production related to shut-ins in the Gulf of Mexico from Tropical Storm Cristobal looks to help balance supply and demand for the week in progress.

Since June 7, US offshore production in the Gulf has declined 952 MMcf/d, or 35%, according to the Bureau of Safety and Environmental Enforcement. Most production is expected to be back online by the end of the week, likely resulting in a larger injection for the week ending June 19, according to Platts Analytics.

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