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US natural gas in storage expands by 115 Bcf to 2.203 Tcf: EIA

Highlights

Build much more than market expected

Henry Hub futures tumble after report

Denver — US natural gas added 115 Bcf last week to storage, much larger than the market expected, and the NYMEX Henry Hub summer strip collapsed to less than $2.20/MMBtu following the Thursday morning announcement.

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US natural gas in storage increased to 2.203 Tcf for the week ended June 14, the US Energy Information Administration reported.

The injection was much more than an S&P Global Platts' survey of analysts calling for a 104 Bcf injection. It was just within the survey range as responses spanned 89 Bcf to 117 Bcf. It was also more than the 95 Bcf build reported during the corresponding week in 2018 and the five-year average injection of 92 Bcf, according to EIA data.

It was also the seventh triple-digit build. Only two weekly injections have measured more than 100 Bcf over the prior two years.

Power demand in the South Central, East and Midwest regions fell by a combined 1.9 Bcf/d, while warmer temperatures across the west drove Pacific and Mountain power demand higher by about 1.3 Bcf/d, paring overall demand declines, according to S&P Global Platts Analytics.

Total US supplies were down 0.4 Bcf/d on the week to average 91.2 Bcf/d, with a 0.3 Bcf/d fall in offshore production and a 0.2 Bcf/d fall in Canadian imports countered with a 0.1 Bcf/d increase in US onshore production. Overall, total production came in at an average 86.7 Bcf/d.

As a result, stocks were 209 Bcf, or 10.5%, more than the year-ago level of 1.994 Tcf and 199 Bcf, or 8%, less than the five-year average of 2.402 Tcf. The deficit to the five-year average is the smallest it's been since December 2017 while the surplus to the year prior is the largest since September 2016.

The NYMEX Henry Hub July contract sank 9 cents to $2.186/MMBtu following the announcement. The remainder of the summer strip, August through October, fell 9.9 cents to average $2.165/MMBtu by Thursday afternoon trading. Ahead of the storage release, NYMEX Henry Hub July contract was trading about 2 cents higher.

At this point, the highest-valued contract over the next year, January 2020, is barely trading above $2.60, a far cry from the $3 it was trading at only a month ago.

WEEK IN PROGRESS

Markets have tightened moderately for the week ending June 21 with balances narrowing by about 1.8 Bcf/d. Total supplies are down 0.5 Bcf/d to average 90.7 Bcf/d, with nearly all of the weaker supply being driven by a force majeure on Alliance Pipeline, which has sharply reduced Canadian imports into the Upper Midwest region.

Downstream, LNG feedgas demand is up 0.3 Bcf/d and power burn demand has increased by 1.2 Bcf/d, helping drive an overall 1.3 Bcf/d increase in total demand, which is averaging 78.5 Bcf/d, according to Platts Analytics.

An early forecast for the week in progress calls for an injection of 84 Bcf, which is 14 Bcf more than the five-year average.

-- Brandon Evans, bevans@spglobal.com

-- Edited by Joe Fisher, newsdesk@spglobal.com