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US natural gas storage fields post largest weekly injection since June: EIA

Highlights

Working gas increases by 88 Bcf

Henry Hub winter futures surge

US working gas inventories added the largest weekly injection since early June with greater builds possible in the weeks ahead, but it appears to be too little, too late to alleviate winter supply concerns as prices strengthen.

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Storage fields injected 88 Bcf for the week ended Sept. 24, the US Energy Information Administration reported Sept. 30. It proved just above the 87 Bcf build expected by a survey of analysts by S&P Global Platts. The build was more than the five-year average of 72 Bcf and last year's 74 Bcf injection in the corresponding week as working gas inventories increased to 3.170 Tcf.

US storage volumes now stand 575 Bcf, or 15.4%, less than the year-ago level of 3.745 Tcf and 213 Bcf, or 6.3%, less than the five-year average of 3.383 Tcf.

The injection proved more than the 76 Bcf build reported the week prior and ranked as the fourth largest weekly injection of the season according to EIA data.

The NYMEX Henry Hub November contract, now the prompt month, jumped 32 cents to $5.80/MMBtu in trading following the release of the EIA's storage report. The remaining winter strip, December through March, added 31 cents to $5.81/MMBtu. The 2022 summer strip tacked on 7 cents to $3.87.

Even with a relatively mild weather forecast for the next 14 days in the US, the concerns around supply being able to meet both domestic heating demand as well as elevated export demand this winter are continuing to pressure Henry Hub prices to the upside.

Driving the upward movement is a combination of factors including rebounding LNG feedgas demand, lagging production, the ongoing storage deficit and the lingering risk around winter reliability, according to S&P Global Platts Analytics.

Also contributing to the rally are skyrocketing energy prices in Europe and Asia. Even with well over $5/MMBtu prices domestically, they sit at a significant discount to the plus $25/MMBtu prices for JKM and TTF.

The comparatively cheap gas in the US places LNG export cargoes in very high demand this winter and is forecast to keep US LNG export facilities fully utilized at 12.2 Bcf/d, according to Platts Analytics

Platts Analytics supply and demand model currently forecasts a 92 Bcf build for the week ending Oct. 1. This would measure 11 Bcf more than the five-year average. The week after points to an 89 Bcf injection, shaving 10 Bcf off the storage deficit. Based on historical averages, US fields should post net injections through the week ending Nov. 5 as stocks peak entering the heating season.