US natural gas storage volumes in the week ended Oct. 1 increased by the largest build of the current injection season, the Energy Information Administration reported Oct. 7.
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Storage fields injected 118 Bcf which proved more than the 111 Bcf build expected by a survey of analysts by S&P Global Platts.
The build reported in the EIA's Weekly Storage Report was more than the five-year average of 81 Bcf and last year's 75 Bcf injection in the corresponding week. It was also the largest injection of the year so far.
US storage volumes now stand at 2.811 Tcf, which is 532 Bcf, or 14%, less than the year-ago level of 3.820 Tcf and 172 Bcf, or 5%, less than the five-year average of 3.464 Tcf.
The Midwest region continued to stockpile volumes, adding 37 Bcf for the week ended Oct. 1. Storage injections in the Midwest have picked up even more to begin October as the region attempts to close the deficit to last year in the final month leading up to the winter withdrawal season. Midwest inventories sit at 971 Bcf, slightly below the five-year average. Injections have climbed to an average of 4.3 Bcf/d to start the month, which is more than double the rate witnessed last October, according to S&P Global Platts Analytics.
The uptick in injections appears unrelated to demand as power burns are tracking relatively in line with where they were last month. However, the region has sharply reduced outbound flows to Eastern Canada this month, with throughput averaging 1.3 Bcf/d to begin October, 500 MMcf/d lower than last month.
The NYMEX Henry Hub November contract added 7 cents to $5.74/MMBtu during late afternoon trading on Oct. 7.
Platts Analytics' supply and demand model currently forecasts a 67 Bcf build for the week ending Oct. 8. This would measure 12 Bcf less than the five-year average.
LNG exports have decline during the week in progress. Total US feedgas deliveries have remained below 10 Bcf/d since Oct. 5 driven mainly by Freeport LNG, according to Platts Analytics. Feedgas deliveries to Freeport dropped from over 2 Bcf/d to just 1 Bcf/d on Oct. 5, rebounding above 1.5 Bcf/d on Oct. 6. The declines were likely due to operations at the export facility as both the feeder pipelines, NGPL and Gulf South, saw roughly 50% reductions each on the day.
Despite global LNG prices reaching new all-time highs, US feedgas this October has averaged just 10 Bcf/d, more than 2 Bcf/d below the max capacity. The lower utilization rates of US export facilities this month has been due to fall maintenance activities on both the pipeline and export facility side. Roughly 2 Bcf/d of upside for LNG feedgas demand remains for the back half of the month as Freeport and Cove Point return to full operations, while Sabine Pass Train 6 ramps up commissioning.
The strong demand globally for US LNG cargoes this winter is driving an LNG feedgas forecast of 12.3 Bcf/d from November 2021 through March 2022 as US export facilities are likely to be at or near 100% utilized. This should keep upward pressure on Henry Hub prices this winter.