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US natural gas in storage set to increase by 93 Bcf: survey

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US natural gas in storage set to increase by 93 Bcf: survey

Highlights

Build looks well above 51 Bcf added last year

Tropical storm dampens some demand

Denver — US natural gas inventories likely posted another hefty gain last week, as a survey showed stocks rising nearly double what they did during the same week last year.

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The US Energy Information Administration is expected to report a 93 Bcf injection for the week that ended September 13, according to a survey of analysts by S&P Global Platts. Responses to the survey ranged from a build of 83 Bcf to 98 Bcf. A 93 Bcf injection would be much more than the 51 Bcf added in the corresponding week last year, as well as the five-year average of 74 Bcf.

The EIA reported an 84 Bcf injection for the week that ended September 13.

The agency is set to report an even stronger injection this Thursday, with demand across the southern US dampened by the effects of Tropical Storm Imelda for the week that ended September 20, according to S&P Global Platts Analytics.

Even as the flooding recedes, the bearish injections are likely to persist through the homestretch of injection season as weak shoulder season demand is exacerbated by declines in LNG feedgas deliveries to Cove Point, which could persist through the middle of October.

Temperatures in the Northeast dropped 3 degrees, with smaller declines spread across the South Central and West regions, resulting in a 10 Bcf drop in overall power burn demand week on week, according to Platts Analytics.

While stocks are on track to finish the injection season at or above the five-year average in most storage regions, the Pacific region remains at risk to finish lower. This is the result of a combination of high demand, maintenance projects and a much lowered working gas capacity at the Aliso Canyon storage field.

The most recent maintenance started last Thursday, when Southern California Gas Company began its L4000 work. That dropped receipt capacity through the Topock/Needles receipt zone to zero. Before the maintenance, receipts through the zone averaged 230 MMcf/d this month, according to Platts Analytics. The capacity reduction brings the total SoCal Gas system receipt capacity to 2.25 Bcf/d.

The maintenance work is expected to last through at least October 14.

The main effect will be on the system's storage inventories. Average demand through October 14 the past three years has been 2.28 Bcf/d. Assuming total system receipt capacity is 2.25 Bcf/d, SoCal Gas will need to average a net withdrawal of 30 MMcf/d for the next month in order to meet system demand. With total inventories at 72 Bcf, the system is at risk of entering the winter well below the current storage capacity of 84 Bcf.

The NYMEX Henry Hub October contract continued its steady slide. It was trading at $2.50/MMBtu Tuesday afternoon, down nearly 17 cents week on week.

The 93 Bcf injection would increase total US stocks to 3.196 Tcf. The deficit versus the five-year average would decrease to 56 Bcf, and the surplus to last year would expand to 435 Bcf. The EIA plans to release its weekly storage report Thursday at 10:30 am EDT.

-- Brandon Evans, bevans@spglobal.com

-- Edited by Bill Montgomery, newsdesk@spglobal.com

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