The U.S. Energy Information Administration reported a weekly build of 32 Billion Cubic Feet (Bcf) in Lower 48 natural gas storage inventories for the week ending June 28, 2024 (Link). Total inventories are now at 3,134 Bcf, 275 Bcf (9.6%) above year-ago levels and 496 Bcf (18.8%) above the 2019-2023 average for the same week.
This morning’s storage report covered yet another exceptionally hot week across the U.S. that featured elevated power generation demand. The result was the lowest weekly build since the first week of injections in early April. The 32-Bcf addition to inventories came in at less than half of the reported injection for the same week in 2023 as well as the five-year average. This brings the streak of lagging both of those benchmarks to 8 consecutive weeks, as the fundamental balance remains relatively tight. Over that 8-week stretch, the surplus to year-ago inventories has narrowed by 175 Bcf, or an average of just over 3.1 Bcf per day, while the cushion to the five-year average has been trimmed by 150 Bcf, or about 2.7 Bcf per day.
Tighter supply and strong demand from the power generation sector are the primary drivers of low storage injections so far, more than a third of the way through the season. While production has recovered from its spring lows, volumes remain well off the highs demonstrated earlier in the year. Meanwhile, power generation demand continues to consistently outpace year-ago levels despite a dramatic increase in renewable generation output. Both of these trends are expected to persist deeper into the injection season, which will continue to erode the storage surplus. Pinebrook Energy Advisors currently forecasts end-of-summer storage levels to peak near 3,800 Bcf, which would represent only a modest surplus to the five-year average heading into the winter.
After falling sharply from highs above $3.00 per MMBtu in mid-June, benchmark futures pricing is relatively quiet today surrounding the early release of the storage report ahead of the Independence Day holiday on Thursday. At the time of writing, the August 2024 NYMEX futures contract is up marginally on the day just below $2.45 per MMBtu, which is about in the middle of the daily trading range.
Today’s report included a revision to the previous week’s data, increasing working stocks as of June 21 from 3,097 to 3,102. While this does effectively add another 5 Bcf to working stocks, it does not materially change the storage situation or the nature of last week’s report.
On a regional level, we saw the second straight drawdown in Salt inventories in the South Central Region, while the Pacific Region also recorded a small 1-Bcf deduction. Mountain Region stocks continue to grow and look poised to eclipse last year’s peak in the coming weeks with more than half of the injection season still ahead.
Detailed Data with Updated Charts in the Natural Gas Storage Report PDF Below: