US natural gas storage volumes increased by 13 Bcf in the week ended July 30, which was 4 Bcf less than a S&P Global Platts survey of analysts, but exactly in line with the Platts Analytics’ storage model.
Working gas in storage increased to 2.727 Tcf, the US Energy Information Administration, or EIA, reported Aug. 5.
The weekly injection was less than the 17 Bcf addition expected by a Platts’ survey of analysts. It also trailed the five-year average build of 30 Bcf and last year’s 32 Bcf injection in the corresponding week.
The injection was less than half of the 36 Bcf build in the week ended July 23, with the decline being driven primarily by the South Central region. It posted a massive draw of 23 Bcf and measured as one of the largest withdrawals from storage in the region on record to take place during an injection season. The region has reported an average draw of 7 Bcf for the week over the past five years. Last year, it added 2 Bcf.
Total US demand increased by more than 3 Bcf/d compared to the week before, while total US supplies were flat, according to Platts Analytics data.
US storage volumes now stand at 542 Bcf, or 16.6% less than the year-ago level of 3.269 Tcf, and 185 Bcf, or 6.4% less than the five-year average of 2.912 Tcf.
The NYMEX Henry Hub September contract remained at $4.16/MMBtu in trading following the release of the weekly storage report. The winter strip, November through March, averaged $4.23/MMBtu.
An early end to a pipeline maintenance restricting flows from the US Northeast to the Southeast should boost supplies to the South Central region. Southeast inflows from the Northeast increased on Aug. 4 from 6.6 Bcf/d to over 7 Bcf/d as the capacity reductions along Texas Eastern Transmission were lifted.
The outage, which began on June 2, cut southbound flows through the Danville compressor station by roughly 600 MMcf/d, lowering total Northeast to Southeast flows by 400 MMcf/d as other pipelines were able to make up some of the losses. The work was completed nearly two months earlier than expected, as the original end date was targeting the end of the third quarter.
The increased supply reaching the Southeast will likely help to keep some pressure on regional prices. However, overall tighter balances throughout the region will likely outweigh any increases to inflows, according to Platts Analytics.
Despite the elevated inflows to the Southeast, spot Henry Hub prices jumped 14 cents during trading on Aug. 4 to settle at $4.12/MMBtu.
Platts Analytics’ supply and demand model currently forecasts a 47 Bcf injection for the week ending Aug. 6, which would measure 5 Bcf more than the five-year average.
US power burns tumbled more than 5 Bcf/d year on year in July, with both higher natural gas prices and milder weather to blame. Population weighted temperatures have come in roughly one degree below the 10-year normal, while prices have tracked $2/MMBtu higher this July versus last.
Higher prices have yielded an estimated 3 Bcf/d of gas-to-coal switching summer-over-summer, but the recent run-up in Henry Hub prices has done little to drive incremental switching, due to higher summer loads.
Source: Platts