US gas storage deficit likely to widen in anemic start to injection season

Following a rocky start to the US natural gas storage injection season, milder weather is finally giving utilities and traders an opportunity to begin rebuilding severely diminished inventories, an S&P Global Commodity Insights survey of analysts shows.

In its upcoming storage publication, the US Energy Information Administration is expected to report a 10-Bcf injection for the week ended April 8, according to this week's survey. Responses to the survey ranged from a 26-Bcf withdrawal to a 30-Bcf injection. The EIA plans to release its weekly storage report on April 14 at 10:30 am ET.

The expected injection of 10 Bcf would reverse net storage activity reported for the final week of March—when colder weather prompted a final withdrawal—and put US inventories back on track to begin rebuilding. As of April 1, stocks were estimated at 1.382 Tcf, their lowest level since April 2019, EIA data showed.

The anticipated 10 Bcf injection would pale in comparison to the 55-Bcf injection reported during the corresponding week in 2021 and fall short of the five-year-average injection of 33 Bcf. Assuming this week's survey prediction is accurate, US storage levels would climb to 1.392 Tcf, but expand their deficit to the five-year average to 308 Bcf and widen the chasm to corresponding year-ago levels to 444 Bcf.

Winter drawdown

Since mid-February, the US gas storage deficit grew nearly 100 Bcf as US production growth has failed to keep pace with across-the-board annual gains in both domestic and export demand.

Over the past eight weeks, US gas production has averaged 92.9 Bcf/d, having grown just over 3.2 Bcf/d in comparison with the corresponding year-ago period. For the same eight-week comparison period, total US gas demand has grown nearly 4.9 Bcf/d, fueled in large part by annual growth in LNG exports.

According to S&P Global-compiled data, feedgas deliveries to US LNG export terminals have averaged nearly 12.6 Bcf/d since mid-February—an annual increase of more than 2.3 Bcf/d. Over the same period, domestic gas demand for heating and power burn are both up about 700 MMcf/d, compared with year-ago levels, while industrial demand has grown by more than 1 Bcf/d.

Since late March, an unseasonably chilly start to spring across the western and central US has prolonged the heating season, keeping pressure on storage levels.

According to updated storage forecasts that S&P Global published, comparatively cool weather so far this month is likely to keep injection demand to a minimum over the next two reporting weeks. For the week in progress, analysts are currently projecting a modest 46-Bcf injection, followed by a 53-Bcf injection for the week ending April 21. If accurate, the first double-digit storage builds of the season would leave the US storage deficit largely intact at more than 300 Bcf below average, S&P Global and EIA data shows.