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US natural gas storage climbs 40 Bcf to 1.49 Tcf as NYMEX future rally stalls

US working gas inventory expanded at a below-average pace in the third week of April, growing this season’s storage deficit to its widest yet, but failing to spur a bullish response from the NYMEX gas futures market.

The US Energy Information Administration on April 28 announced another undersized injection of 40 Bcf to US gas storage for the week ending April 22 in its fourth reported inventory build of the season.

The injection was just 2 Bcf less than anticipated by S&P Global Commodity Insights’ survey of analysts, which called for a 42 Bcf addition to stocks in the third week of April.

With another below-average injection, US working gas inventories climbed to 1.49 Tcf in the week ended April 22. The storage deficit to 2021 narrowed as stocks climbed to 406 Bcf, or about 21%, below the year-ago level of 1.896 Tcf. Compared with the five-year average injection, though, the build came up short, growing this season’s deficit to its widest yet at 305 Bcf, or 17%, below the historical average, EIA data showed.

The NYMEX Henry Hub June contract dropped 25 cents, or about 3%, from its prior-day settlement price to around $7.10/MMBtu following the report’s release. The balance-of-summer forward curve moved into slight backwardation from July to October, pricing at an average of about $7.20/MMBtu, data from CME Group showed.

Futures, fundamentals
Since April, the 2022 NYMEX Henry Hub futures curve has traded comfortably above $6/MMBtu, even testing highs in the upper $7 range more recently, S&P Global data shows.
At a time of year when the US market typically troughs, the outlook for $6-$7/MMBtu gas remains on solid footing as this season’s inventory deficit lingers fueled by strong demand and flagging production.


Through the reporting week ending May 6, unseasonably low temperatures in the US Northeast and across parts of the Midwest have and are expected to keep heating demand elevated, limiting storage injections. The storage deficit is expected to further widen in the upcoming two reporting weeks by anywhere from 30-40 Bcf in total, according to updated forecasts from S&P Global.

As the US storage deficit grows, the outlook for summer cooling demand looks increasingly bullish based on recent seasonal weather outlooks and the potential for an uptick in coal-to-gas switching this season.

In a three-month outlook published April 21, the US National Weather Service said that it anticipates as much as a 50%-60% risk for above-average temperatures in June, July and August across most of the US West and the Northeast. For the remaining Lower 48 states, above-average temperatures are also in the forecast for this summer, although at slightly lower probabilities.

Record LNG export demand expected this summer also promises to keep the US market tight in the months ahead. During this season’s peak-demand period, delivered feedgas volumes are expected to average over 13 Bcf/d as capacity at Venture Global’s Calcasieu Pass terminal continues ramping up. Year to date, US LNG feedgas demand has averaged about 12.5 Bcf/d, S&P Global data shows.

On the supply side, US production has meanwhile continued to stumble this year, averaging about 92.7 Bcf/d – just 300 MMcf/d above last summer’s April to October average
Source: Platts

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