US working natural gas volume in underground storage rises by 56 Bcf: EIA
US natural gas in storage rose 56 Bcf in the week ended July 3, according to Energy Information Administration data released July 9, as electric generation boosted demand and the Henry Hub prompt-month contract continues to inch closer to the $2/MMBtu mark.
The estimated 56 Bcf build, to total underground gas storage stocks of 3.133 Tcf, was slightly above consensus expectations of an S&P Global Platts’ survey of analysts, which called for a 55 Bcf build. Responses to the survey ranged from an injection of 42 Bcf to one of 65 Bcf.
The injection was smaller than the 83 Bcf build reported during the corresponding week in 2019 and the five-year average increase of 68 Bcf, according to EIA data.
Summer heat intensified across the US Midwest and Southeast in the week that ended July 3, pushing estimated nationwide power burn to a year-to-date high of 39.9 Bcf/d, according to S&P Global Platts Analytics.
Meanwhile, after bottoming out at 3.8 Bcf/d two weeks ago, LNG feedgas deliveries held above 4 Bcf/d for the second week in a row, helping trim the 18% inventory surplus that will weigh on Henry Hub prices through the end of injection season in October.
The NYMEX Henry Hub balance of summer strip has risen roughly 2 cents to $1.90/MMBtu, shedding half the earlier session gains prior to the storage report release. Spreads from summer to winter have narrowed about 10 cents over the last week to 82 cents from 92 cents, but remain strong.
Storage volumes now stand 685 Bcf, or 28%, above the year-ago level of 2.448 Tcf and 454 Bcf, or 17%, above the five-year average of 2.679 Tcf.
Platts Analytics’ supply and demand model currently expects a 52 Bcf injection for the week ending July 10, which would be 11 Bcf below the five-year average, as supply-and-demand fundamentals draw tighter.
Gas-fired power demand continues to ratchet up deeper into the US cooling season. Year-to-date power burn has been impressive from the perspective of electricity demand, which was relatively lackluster because of a mild winter, followed immediately by the suppressive impact of coronavirus and efforts to mitigate its spread.
However, corresponding pressure to gas prices has provided gas-fired generation the ability to increase market share and dominate the supply stack, displacing an enormous amount of coal-fired generation, according to Platts Analytics.
Through June, electricity demand across the continental US averaged 4% lower year on year, while gas-fired generation managed to increase 7% in the same period. Gas prices at Henry Hub averaged 90 cents/MMBtu lower through the first half of 2020, which facilitated nearly 30% year-on-year declines in coal-fired generation.
Source: Platts