Utilities injected 76 Bcf natural gas into underground storage for the week ended Sept. 17, the U.S. Energy Information Administration (EIA) reported Thursday. The print was essentially on par with market expectations and supported a Nymex natural gas futures recovery.
With robust global demand for U.S. exports of liquefied natural gas (LNG) and peak domestic demand looming this winter, the latest inventory build left supplies lighter than historic averages for this time of year. That rekindled concerns about ample levels of gas for the cold months ahead, giving bulls room to roam in early trading.
“This winter is gonna be very different from previous years for sure as we haven’t had this tight of a market in a very long time,” Refinitiv analyst Shuya Li said Thursday on The Desk’s online energy platform Enelyst. “The prompt prices have come down a bit from the record highs as we head into the shoulder season – but winter risks didn’t go away.”
Ahead of the EIA report, the October contract was up nearly 9 cents at $4.894/MMBtu.
The prompt month gave up a bit of ground to around $4.877 when the EIA data was released at 10:30 ET on Thursday. However, the October contract was trading at $4.900 at 11:00 ET, up 9.5 cents from Wednesday’s close.
A day earlier, the prompt month finished flat, barely ending a four-day losing streak that was driven by forecasts for mild weather and light domestic demand through September and early October.
Last week, however, futures reached seven-year highs above $5.00, fueled by an anticipated global supply crunch this winter, with both Europe and Asia scrambling to fortify stockpiles and ensure ample fuel levels to power furnaces and industrial plants.
Prior to the report, results of a Reuters survey ranged from injections of 58 Bcf to 82 Bcf, with a median build of 76 Bcf. Bloomberg’s survey showed a 75 Bcf median, with estimates from 68 Bcf to 83 Bcf.
NGI’s model predicted an 82 Bcf build. In the year-earlier period, EIA recorded a 70 Bcf injection, while the five-year average injection was 74 Bcf.
Last week, EIA reported an 83 Bcf injection.
The latest build lifted inventories to 3,082 Bcf. However, it left stocks well below the year-earlier level of 3,671 Bcf and the five-year average of 3,311 Bcf.
By region, the Midwest led with a build of 28 Bcf, according to EIA. The South Central followed with an increase of 25 Bcf; this included a 14 Bcf injection into nonsalt facilities and an 11 Bcf build in salts.
The East region recorded a build of 19 Bcf, while Mountain region stocks rose by 3 Bcf.
Pacific inventories were flat.
Looking ahead, analysts on Enelyst said they anticipated larger injections for a few weeks, given forecasts for comfortable temperatures and modest demand over much of the Lower 48.
Refinitiv’s Li said stocks are on track to total 3.5 Tcf by the end of October. That is well below the year earlier level of nearly 4 Tcf, she noted. If production ramps up this fall, domestic supplies should prove adequate, though output remains a wildcard.
Li said Refinitiv’s forecast showed U.S. production reaching 95 Bcf/d for this winter, up from around 91 Bcf/d this week. Still, output has been slow to increase this year, she added, and the ongoing hurricane season has already delayed — and could further interrupt — production increases in the Gulf of Mexico.
“We really need this production back,” Li said, to ensure inventories are sufficient and LNG exports can support global needs.
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