US natural gas in underground storage rises by 62 Bcf: EIA
The US Energy Information Administration reported a 62 Bcf build to US natural gas storage for the week ending July 12, marking the first bullish report from the agency during this injection season.
US gas in storage increased to 2.533 Tcf as a result, leaving stocks 291 Bcf, or 13%, above the year-ago level of 2.242 Tcf and 143 Bcf, or 5.3%, below the five-year average level at 2.676 Tcf.
Following 15 consecutive above-average builds reported by the EIA, last week’s injection was the first of this injection season to undershoot the five-year average storage addition of 63 Bcf.
Last week’s injection was less than an S&P Global Platts’ survey of analysts calling for a 65 Bcf build. Responses to the survey ranged from 56 Bcf and 72 Bcf.
The injection was also less than the 68 Bcf and 70 Bcf builds predicted by S&P Global Platts Analytics’ supply-demand model and storage report, respectively.
Following Thursday’s announcement from the EIA, the prompt-month NYMEX Henry Hub contract briefly climbed to about 2 cents to $2.35/MMBtu, before edging downward to a settlement at $2.29/MMBtu.
Last week’s bullish injection to gas storage comes following a net 1.1 Bcf/d tightening in the US supply-demand balance, according to Platts Analytics.
During the week, more seasonal summer temperatures lifted gas-fired power burn by an estimated 900 MMcf/d, which was partially offset by declines in residential-commercial and LNG-feedgas demand.
Over the same reference period, US production from offshore fields in the Gulf of Mexico declined by about 500 MMcf/d as Hurricane Barry shuttered operations near the Louisiana and Mississippi coastlines. Weekly gains in onshore production partially offset that decline.
For the week ending Friday, Platts Analytics’ storage report and supply-demand model are forecasting bullish injections of 29 Bcf and 30 Bcf, respectively. If realized, a build around that level would undershoot the five-year average injection by 14 to 15 Bcf, according to EIA data.
Gas-fired power burn has continued to strengthen through mid-July, helping to tighten this summer’s supply-demand balance. Month to date, burns have averaged 40.6 Bcf/d or about 1.1 Bcf/d above last year’s month-to-date average. On Wednesday, power burn set a new record-high level at 44.6 Bcf/d.
For the week ending Friday, aggregate US balances look to be about 4.2 Bcf/d tighter compared with last week.
Power burn and LNG feedgas demand are up by 2 Bcf/d and 2.1 Bcf/d, respectively. On the supply side, continuing production declines related to Hurricane Barry have led an overall 2.2 Bcf/d drop in output this week compared with last week.