The U.S. Energy Information Administration (EIA) on Thursday reported an injection of 88 Bcf natural gas into storage for the week ended Sept. 24. The result barely exceeded the midpoint of analysts’ estimates, but it was not high enough to curb upward pressure on Nymex natural gas futures.
Ahead of the EIA report, the November contract was up 7.0 cents at $5.547/MMBtu, paring losses from a day earlier. The prompt month advanced further to $5.563 when the EIA data was released mid-morning. By 11 a.m. ET, the November contract was up 16.0 cents to $5.637.
The build easily exceeded the 74 Bcf print for the same week in 2020 and the five-year average of 72 Bcf.
Storage levels in the United States over the past four weeks have steadily climbed, topping expectations, and analysts expect continued strong injections into October amid forecasts for mild weather and modest domestic demand.
However, outlooks points to the potential for a cold winter in Europe, where gas stockpiles are already precariously light, and power demand is ramping up in China and elsewhere in Asia. These factors are driving surges in global prices as well as demand for U.S. exports of liquefied natural gas (LNG), fueling Henry Hub futures over multiple rallies this month.
“Asian and European markets are freaked out,” said one participant on The Desk’s online energy platform Enelyst. “Everybody is worried about low natty stocks in advance of winter.”
Prior to the report, the median from a Bloomberg survey came in at 86 Bcf, with injection estimates ranging from 79 Bcf to 92 Bcf. A Reuters poll landed on a build of 87 Bcf, with a low estimate of 66 Bcf and a high of 92 Bcf.
The Wall Street Journal’s weekly survey produced an 84 Bcf average increase. Estimates spanned 66 Bcf to 89 Bcf. NGI modeled a build of 89 Bcf.
The latest injection lifted inventories to 3,170 Bcf, but stocks held below the year-earlier level of 3,745 Bcf and the five-year average of 3,383 Bcf.
The Midwest and East regions led with builds of 30 Bcf and 28 Bcf, respectively, according to EIA.
The South Central build of 23 Bcf followed and included a 12 Bcf injection into nonsalt facilities and an increase of 11 Bcf in salts.
Mountain region stocks increased 5 Bcf, while Pacific inventories rose 3 Bcf.
Looking ahead, analysts anticipate an even larger build with next week’s EIA report. Noting mild shoulder-season temperatures, Bespoke Weather Services preliminary estimated an increase of 98 Bcf for the week ending Oct. 1. Early estimates in a Reuters poll ranged from an addition of 78 Bcf to 111 Bcf, with a mean increase of 92 Bcf.
“Certainly sustained extreme cold poses a much higher price risk, though we currently feel warm wins out from mid-October into November, and that will pose downward price risks,” Bespoke said.
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