US natural gas storage climbs 53 tcf to 1.45 tcf, pausing NYMEX futures rally
Deficit at five-year average narrows to 292 billion cubic feet
NYMEX Henry Hub dips briefly to $6.70/MMBtu
National Weather Service Forecasts Bullish Demand
U.S. working gas inventories recorded their first above-average increase of the season in mid-April, helping to reduce this season’s persistent storage shortfall while dampening the rally in oil futures. NYMEX gas.
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The US Energy Information Administration reported a surprisingly large injection of 53 billion cubic feet into US storage inventory on April 21 for the week ending April 15 in its third reported inventory build of the season.
The injection was 22 billion cubic feet above what the S&P Global Commodity Insights analyst survey expected. The survey predicted an addition of 31 billion cubic feet to inventories in the second week of April. The injection also topped the survey’s highest construction forecast for the week, which had called for a 51 billion cubic feet addition to inventories.
The oversized injection took US working gas inventories to 1.45 Tcf in the week ended April 15. The storage deficit narrowed as inventories climbed to 428 Bcf, or about 23%, below the previous year’s level of 1.878 Tcf and 292 Bcf, or almost 17%, below average five-year period of 1.742 Tcf, according to EIA data.
Immediately following the release of the EIA’s storage report, NYMEX Henry Hub fast futures lost 15-20 cents, dropping as low as $6.70/MMBtu in early trading, according to group data. CME.
While the first bearish injection of the summer season has given the futures rally pause, this season’s storage shortfall could persist into the summer months if persistent heating demand is quickly replaced by electric cooling at the gas – a possible scenario that short-term and seasonal weather forecasts suggest.
Over the next eight to 14 days, unusually cool weather in the Northeastern United States and Upper Midwest is expected to keep population-weighted average temperatures in both regions cold to 56 degrees Fahrenheit, according to recent forecasts from the US National Weather Service and S&P. Global commodity outlook.
A longer-range weather service forecast shows that nearly all of the continental United States, except the upper Midwest, is likely to experience above-average temperatures in May, June and July. The three-month outlook, released April 21, shows a concentrated risk of warmer weather across the west, including Texas.
As coal prices in the Appalachian Basin continue to rise, trading at over $140/st this month, S&P Global analysts are also predicting that many dual-fuel generators will spend more power from gas base this summer, which could add even more power to electricity consumption this season. During the peak cooling months of June through August, generators are expected to burn an average of 39,100 cfd, surpassing last summer and about 3% below the 2020 season record of an average of 40.3 1,000 cfd for the three months.
According to an updated storage forecast released by S&P Global on April 21, U.S. inventories are expected to rise by just 34 billion cubic feet in the current week, undershooting the five-year average and increasing the deficit. If accurate, inventories would hit 1.484 Tcf in the week ending April 22, leaving US gas storage at its biggest shortfall this year of 311 Bcf below the historical average.
Despite the NYMEX Henry Hub’s rapid monthly price decline on April 21, futures traders continued to recognize potential supply risks this summer and through the rest of the year, with contracts from June through December 2022 having all a price comfortably above $7/MMBtu, CME Group data showed.