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US working natural gas volumes in underground storage rise by 26 Bcf: EIA

Storage inventories increased by 26 Bcf to 3.241 Tcf for the week ended July 24, the US Energy Information Administration reported July 30.

US natural gas in underground storage increased by the lowest net volume of the injection season last week under record-setting gas-fired generation demand, but a lowered demand outlook for August prompted the NYMEX Henry Hub balance-of-summer contract strip to retreat.

The injection was more than an S&P Global Platts survey of analysts calling for a 23 Bcf build. The injection measured less than the 56 Bcf build reported during the same week last year as well as the five-year average gain of 33, according to EIA data. It was the smallest net injection of the year.

Storage volumes now stand at 626 Bcf, or 24%, more than the year-ago level of 2.615 Tcf, and 429 Bcf, or 15.3%, more than the five-year average of 2.812 Tcf.

The NYMEX Henry Hub balance-of-summer contract strip, now including only the months of September and October, sold off sharply following a slightly larger-than-anticipated storage inventory increase last week, with September trading down 6 cents, to $1.87, and October down 5 cents, to $2.03. With September now advancing to the prompt-month slot, it is the last contract in the entire strip trading below $2. October kicks off a steep section of the curve that hits just shy of $3 by the beginning of next year, with January 2021 hitting resistance just below at $2.99 the morning of July 30.

Platts Analytics supply and demand model currently forecasts a 26 Bcf injection for the week ending July 31, which would be 7 Bcf less than the five-year average, causing another reduction to the storage overhang. However, overall US demand is forecast to slip during August, prompting larger injections.

After several consecutive weeks of tightening, US supply-demand balances are trending looser for the week ending July 31 as temperature-driven power burn demand has begun to sputter and the LNG sector faces continuing weak demand.

Total supplies have held mostly flat, with the week’s 0.1 Bcf/d net decline composed of a 0.3 Bcf/d drop in storm-related offshore production declines partly offset by nominal increases in LNG sendout and net Canadian imports. Downstream, total demand has fallen by 1.4 Bcf/d on the week, with power burn demand dipping 0.7 Bcf/d on the week and LNG export terminals taking 0.5 Bcf/d less volume than a week earlier.

Source: Platts

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