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Analysts call for 88 Bcf injection to US gas storage for seventh build of season

Houston — US gas in storage is expected to have increased by 88 Bcf last week asdipping production and rising temperatures foreshadow a string ofslightly below-average builds in the weeks ahead, creating a bullish casefor end-of-season levels.

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The US Energy Information Administration on Thursday is expected toreport an 88 Bcf injection for the week ended June 8, according to asurvey of analysts by S&P Global Platts. Responses to the survey were tight and ranged for a build of 81 Bcf to 95Bcf. The EIA plans to release its weekly storage report at 10:30 am EST.An 88 Bcf injection would be more than the 82 Bcf build in thecorresponding week last year but less than the five-year average build of91 Bcf.

STORAGE FIELDS ADDED 536 BCF THIS SEASON

This would only be the seventh injection of the year compared to the 10net injections normally seen by this time. Over the past five yearsstorage has added an average amount of 719 Bcf by now. This year, stockshave risen by 536 Bcf since the end of the heating season. In 2014, whenin the injection season started at a low of 824 Bcf, storage fields hadadded 783 by early June. An injection within analysts' expectations of 88 Bcf would increasestocks to 1.905 Tcf. The deficit versus the five-year average wouldexpand to 515 Bcf and the deficit versus last year in the correspondingweek would shrink to 793 Bcf.

The EIA reported a 92 Bcf injection for the week ended June 1. Itincreased inventories to 1.817 Tcf, which was 30.5% less than theyear-ago inventory of 2.616 Tcf, and 22% less than the five-year averageof 2.329 Tcf.

NET INJECTIONS DIP IN THREE OF FIVE STORAGE REGIONS

Week-over-week injections are projected to be lower in three of the fiveEIA storage regions.

The South Central region is expected to inject more than any otherregion, according to S&P Global Platts Analytics. Strong gas-fired powergeneration in the South was not enough to offset some production growthand, more significantly, over 8 Bcf of additional gas flowing into theregion to bolster the weekly injection.

Cooler temperatures in the Midwest last week should lead to a slightlyhigher injection while a dip in Rockies production is expected to lead toa smaller build in the Mountain region. Injections in the Pacific andEast regions should be similar to the week prior.

Production has also not been as strong in several producing regions aspreviously expected. For example, Northeast production is averaging 300MMcf/d less than expected so far this month as Rover Pipeline is stillawaiting approval from the US Federal Energy Regulatory Commission on itsMajorsville and Burgettstown laterals.

Offshore production is also down about 130 MMcf/d as the EnchiladaPlatform has yet to show signs of returning online. Rockies productionshows the largest decline of 400 MMcf/d, which is likely due tomaintenances at several processing plants located in the Denver-JulesburgBasin and the Green River Overthrust.

An early forecast for the week ending June 15 is calling for a build of80 Bcf, according to S&P Global Platts Analytics, which is once againslightly less than the five-year average. Injections are expected tocontinue shrinking slightly in the weeks ahead. The injections throughoutJune typically dwindle as summer weather boosts gas-fired powergeneration demand. -- Brandon Evans, bevans@spglobal.com

-- Edited by J. Robinson, newsdesk@spglobal.com