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US natural gas in underground storage rises by 84 Bcf: EIA

Highlights

Build more than most expected

Henry Hub prompt, winter strip falls

Denver — US working natural gas volumes in underground storage rose 84 Bcf last week, more than most of the market expected, as the NYMEX Henry Hub prompt-month contract and winter strip plummeted following the announcement.

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Storage inventories increased to 3.103 Tcf for the week ended September 13, the US Energy Information Administration reported Thursday morning.

The injection was more than an S&P Global Platts' survey of analysts calling for a 76 Bcf build. It was at the high end of the survey range as responses spanned from 71 Bcf to 85 Bcf.

The build was equal to the 84 Bcf injection reported during the corresponding week in 2018, but just above the five-year average of 82 Bcf, according to EIA data. As a result, stocks were 393 Bcf, or 14.5%, above the year-ago level of 2.710 Tcf and 75 Bcf, or 2.4%, above the five-year average of 3.178 Tcf.

The NYMEX Henry Hub October contract fell 8.1 cents to $2.556/MMBtu following the announcement. The winter strip dropped 7.34 cents to $2.708/MMBtu.

Comparing the weekly EIA ranges for cash prices, cash prices were up across the board week on week outside the West. The biggest mover was the Waha hub, which was up nearly 40% as congestion relief from Gulf Coast Express Pipeline has allowed that market to recover.

For the week in progress, total US supply shows virtually no change while demand is down by 1.2 Bcf/d week on week, according to S&P Global Platts Analytics. Reductions in gas-fired power generation burn occurred along the East Coast and Texas, where temperatures fell on average about 1.5 degrees. The Southeast featured the largest weekly losses at 0.8 Bcf/d compared with the Northeast and Texas at 0.6 Bcf/d and 0.2 Bcf/d, respectively.

Storage inventories look to rise 79 Bcf and 88 Bcf over the next two weeks, according to a Platts Analytics forecast. These bulky builds would continue to reduce the ever-shrinking deficit to the five-year average. The EIA has only reported two injections less than the five-year average since March. Both occurred in July, as hot weather drove demand.

Over the past five years, the final injection of the season, on average, was the week ended November 8. Eight more net injections remain before the flip to heating season if the average holds true. If stocks add the same amount as the five-year average over said time frame, 552 Bcf, peak storage would hit 3.655 Tcf. The five-year end-of-season average is 3.73 Tcf.

But weekly storage injections so far this season are averaging 29% above the five-year average. If this continues through season's end, stocks will peak at 3.8 Tcf. With recent builds coming in closer to average, the final volume will likely be somewhere between 3.6 and 3.8 Tcf.

-- Brandon Evans, bevans@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com