US working natural gas in underground storage rises 109 Bcf on week: EIA

Denver — US natural gas stocks increased by more than the five-year average last week, with another heavy build likely for the week in progress, as the Henry Hub summer strip dipped Thursday.

Working natural gas inventories at US storage facilities increased 109 Bcf to 2.139 Tcf in the week that ended May 1, according to data the US Energy Information Administration released Thursday.This is only the second time since the EIA began reporting data that the Lower 48 reported a triple-digit injection for a storage week in April.

The injection was slightly larger than the consensus expectations of analysts surveyed by S&P Global Platts, which called for a 105 Bcf build. The injection was also larger than the 96 Bcf build reported during the same week last year as well as the five-year average addition of 74 Bcf.

The season's first triple-digit storage injection reflects the steady declines in gas demand underway over the past several weeks, which now put supply levels well above demand on a daily basis. During the reference week, total demand fell by an additional 6.3 Bcf/d on the week to an average 78.9 Bcf/d, according to Platts Analytics.

Declines occurred across all demand sectors. Residential and commercial took the lead by shedding 5.2 Bcf/d week over week. LNG feedgas has continued to trend lower as well, falling to 7.5 Bcf/d, or roughly 2 Bcf/d lower than where it was in early April. Upstream, total supplies fell to a lesser degree, dropping 1.1 Bcf/d on the week to an average 94.2 Bcf/d.

Storage volumes now stand 796 Bcf, or 52%, above the year-ago level of 1.524 Tcf and 395 Bcf, or 20.5%, higher than the five-year average of 1.924 Tcf.

The NYMEX June gas futures contract remained at $1.94/MMBtu following the release of the weekly storage report.

Only a day earlier, the contract had traded up to $2.13 on expectations of supply shortages following an explosion on Texas Eastern Pipeline earlier in the week, but the bullish rally quickly subsided, leaving prices today essentially flat to where they were a week ago. Balance-of-summer prices are at $2.28, and next winter hovers around the $2.90 mark.

The S&P Global Platts Analytics supply and demand model forecasts a 108 Bcf addition to US storage volumes for the week ending May 8. This would be more than 20 Bcf above the five-year average and continue to grow the storage surplus.

Balances are trending looser this week but at a slower rate, as large declines in supply helped to offset falling seasonal demand. Total supplies this week are down 1.7 Bcf/d to average 92.5 Bcf/d, led by a 1.3 Bcf/d drop in production stemming from lower associated gas production in key oil producing basins.

Offshore gas production is down as well, with this week's 0.4 Bcf/d decline bringing total losses of 0.7 Bcf/d in the last two weeks. Res-comm demand continues to slide as well, as temperatures become milder, shedding 2.8 Bcf/d on the week and bringing total demand to an average 76.1 Bcf/d for the period.