US natural gas storage deficit likely to widen as chilly spring weather persists

US natural gas in storage likely expanded at a below-average pace in the third week of April with cool spring weather helping to grow the inventory deficit and sustain the rally in the NYMEX gas futures.

The US Energy Information Administration this week is expected to report a 42 Bcf injection to US gas storage for the week ended April 22, according to this week's survey of analysts by S&P Global Commodity Insights. Responses to the survey were reported in a tight range this week, with expected injections ranging from 35 Bcf to 50 Bcf. The EIA plans to release its weekly storage report on April 21 at 10:30 am ET.

The expected build of 42 Bcf would be the fourth reported injection of 2022 and the third consecutive weekly build this season, which comes as cool spring temperatures limit injection demand.

The anticipated 42 Bcf injection would measure more than double the 2021 corresponding-week injection of 18 Bcf but fall short of the five-year average injection of 53 Bcf. Assuming the survey prediction is accurate, US storage levels would climb to 1.492 Tcf, expanding the deficit to the five-year average to 303 Bcf, while narrowing the shortfall to 2021 corresponding-week storage levels to 404 Bcf.

Weather

Unseasonably cool spring weather last week likely limited storage injections in the EIA's Midwest and East regions, according to S&P Global gas storage analysts. In both regions, late-season heating demand this month has helped to widen the US storage deficit and propel the rally in NYMEX gas futures.

In the week ended April 22, population-weighted temperatures across the Upper Midwest averaged a chilly 40 degrees Fahrenheit, or nearly 9 degrees below normal. In the Northeast, regional temperatures averaged 48.5 F over the same week, or more than 3 degrees below normal, S&P Global data showed.

In both regions, heating demand outperformed the prior 10-year average, limiting injections to gas storage. Combined, net injections across the Midwest and Northeast are projected to total under 10 Bcf for the week ended April 22 – less than half of the injection total reported across the two regions in the prior reporting week, EIA data shows.

During the week in progress, milder temperatures have significantly reduced the call on gas-fired residential and commercial heating, allowing more supply to be diverted to storage.

In the week ending April 28, early estimates project a much larger net build – likely within the range of 65 Bcf to 85 Bcf. If accurate, total storage injections during the final week of April would come much closer to the five-year average injection of 78 Bcf, or potentially exceed that number, S&P Global and EIA data show.