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US natural gas storage inventories set to increase by 87 Bcf: survey

Highlights

Dorian did little to dampen demand

High production leads to string of heavy builds

Denver — US natural gas storage volumes are expected to post another above-average build, despite the effects of Hurricane Dorian, as US onshore production posted a record-high weekly average.

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The US Energy Information Administration is expected to report an 87 Bcf injection for the week ended September 6, according to a survey of analysts by S&P Global Platts. Responses to the survey were wide and ranged from a build of 73 Bcf to one of 101 Bcf. The EIA plans to release its weekly storage report on Thursday at 10:30 am EDT.

An 87 Bcf injection would be more than the 68 Bcf added in the corresponding week last year, as well as the five-year average of 73 Bcf.

An injection within expectations would increase stocks to 3.028 Tcf. The deficit versus the five-year average would decrease to 68 Bcf, and the surplus to last year would expand to 402 Bcf. The build looks to be more than the week prior, when the EIA reported a 60 Bcf injection, as US demand dropped for the week ended August 30.

The first natural gas storage week in September tightened due to warmer weather, but this was likely offset by dampened demand from Hurricane Dorian and the holiday weekend, according to S&P Global Platts Analytics.

Dorian left about 260,000 people without power in Georgia, South Carolina and North Carolina, and gas-fired generation demand dropped 600 MMcf/d. Still, temperatures across the US increased 2 degrees week over week, pushing up power burn 10 Bcf despite the effects of Dorian in the North and Southeast regions.

However, US onshore production set another record high for the week ended September 6, averaging 87.7 Bcf/d, with most of the gains coming from the Midwest.

Storage injections have outpaced the five-year average as a result of rising natural gas production. At the beginning of April, the injection season started with working inventories 28% lower than the five-year average for the same period. By the week ending August 30, inventories were 82 Bcf, or 3%, lower than the five-year average of 3.023 Tcf.

The EIA forecasts natural gas storage levels will hit 3.769 Bcf by the end of October, which is slightly higher than the five-year average and 16% higher than October 2018 levels.

On September 3, the long-awaited Sur de Texas-Tuxpan pipeline reported flows for the first time, providing a new outlet for South Texas gas that should support prices at Henry Hub through the remainder of the summer.

Henry Hub spot prices continue to push higher, reaching $2.64/MMBtu on Tuesday, the highest value reached since May. The October contract was trading at $2.59 during Tuesday afternoon trading, which is also the highest the front month has traded since May.

-- Brandon Evans, bevans@spglobal.com

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