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US natural gas in storage likely rises in line with average as storm approaches Gulf Coast

Highlights

Hurricane Sally to depress US Southeast demand

LNG demand crosses 5 Bcf/d

Denver — A survey of analysts expects natural gas in storage increased by 77 Bcf in the week ending Sept. 11, exactly in line with the five-year average, as power outages in the Southeast lingering from Hurricane Laura continued to disrupt power-burn demand in the region as Hurricane Sally crawls towards to the US Gulf Coast, further threatening demand levels for the week in progress.

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Responses to the survey ranged from an injection of 68-80 Bcf. The EIA plans to release its weekly storage report on Thursday at 10:30 am ET.

A 77 Bcf injection would be less than the 82 Bcf addition reported in the corresponding week last year but match the five-year average build of 77 Bcf. A build within expectations would increase stocks to 3.602 Tcf. The surplus to the five-year average would remain at 409 Bcf, and the overhang to 2019 would slide to 523 Bcf.

Natural gas storage injections for the week ended Sept. 11 were supported by falling gas-fired generation in the Midwest and Rockies, coupled with offshore production recovering from Hurricane Laura, according to S&P Global Platts Analytics. While Cameron LNG remains out of service due to extensive transmission line damage, deliveries to Sabine Pass ramped up through early September, adding 2.1 Bcf/d to demand, and pushing LNG exports for the total US above 5 Bcf/d for the first time since early June.

The NYMEX Henry Hub October contract increased 4 cents to $2.35/MMBtu during late afternoon trading on Sept. 15.

Before the US Gulf Coast could fully recover from the previous storm, the 18th named storm of the year, Sally, was already on track to make landfall as a Category 1 hurricane near the Alabama/Mississippi border late on Sept. 14. Sally's probable trajectory is farther east than Laura, making it unlikely to significantly disrupt LNG facilities, but losses to offshore production will likely support prices at Henry Hub through the second half of September.

Although Hurricane Laura dissipated in late August, power-line transmission damage in southwest Louisiana continues to hamper power-burn demand in the US Southeast. Of the more than 200,000 customers who lost power from Laura, Entergy had restored service to roughly half by the end of the week-ended Sept. 11. Power-burn demand estimates in the Southeast and Texas fell by about 2 Bcf/d week over week.

Platts Analytics' supply and demand model expects an injection of 67 Bcf for the week ending Sept. 18. This would reduce the surplus to the five-year average by 13 Bcf. Power burn in the Southeast US has fallen to 89 Bcf/d for the week in progress after measuring 92 Bcf/d for the week prior.