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Analysts call for 88 Bcf injection to US gas storage for seventh build of season

Houston (Platts)--13 Jun 2018 527 pm EDT/2127 GMT


US gas in storage is expected to have increased by 88 Bcf last week as dipping production and rising temperatures foreshadow a string of slightly below-average builds in the weeks ahead, creating a bullish case for end-of-season levels.

The US Energy Information Administration on Thursday is expected to report an 88 Bcf injection for the week ended June 8, according to a survey of analysts by S&P Global Platts. Responses to the survey were tight and ranged for a build of 81 Bcf to 95 Bcf. The EIA plans to release its weekly storage report at 10:30 am EST. An 88 Bcf injection would be more than the 82 Bcf build in the corresponding week last year but less than the five-year average build of 91 Bcf.

STORAGE FIELDS ADDED 536 BCF THIS SEASON

This would only be the seventh injection of the year compared to the 10 net injections normally seen by this time. Over the past five years storage has added an average amount of 719 Bcf by now. This year, stocks have risen by 536 Bcf since the end of the heating season. In 2014, when in the injection season started at a low of 824 Bcf, storage fields had added 783 by early June. An injection within analysts' expectations of 88 Bcf would increase stocks to 1.905 Tcf. The deficit versus the five-year average would expand to 515 Bcf and the deficit versus last year in the corresponding week would shrink to 793 Bcf.

The EIA reported a 92 Bcf injection for the week ended June 1. It increased inventories to 1.817 Tcf, which was 30.5% less than the year-ago inventory of 2.616 Tcf, and 22% less than the five-year average of 2.329 Tcf.

NET INJECTIONS DIP IN THREE OF FIVE STORAGE REGIONS

Week-over-week injections are projected to be lower in three of the five EIA storage regions.

The South Central region is expected to inject more than any other region, according to S&P Global Platts Analytics. Strong gas-fired power generation in the South was not enough to offset some production growth and, more significantly, over 8 Bcf of additional gas flowing into the region to bolster the weekly injection.

Cooler temperatures in the Midwest last week should lead to a slightly higher injection while a dip in Rockies production is expected to lead to a smaller build in the Mountain region. Injections in the Pacific and East regions should be similar to the week prior.

Production has also not been as strong in several producing regions as previously expected. For example, Northeast production is averaging 300 MMcf/d less than expected so far this month as Rover Pipeline is still awaiting approval from the US Federal Energy Regulatory Commission on its Majorsville and Burgettstown laterals.

Offshore production is also down about 130 MMcf/d as the Enchilada Platform has yet to show signs of returning online. Rockies production shows the largest decline of 400 MMcf/d, which is likely due to maintenances at several processing plants located in the Denver-Julesburg Basin and the Green River Overthrust.

An early forecast for the week ending June 15 is calling for a build of 80 Bcf, according to S&P Global Platts Analytics, which is once again slightly less than the five-year average. Injections are expected to continue shrinking slightly in the weeks ahead. The injections throughout June typically dwindle as summer weather boosts gas-fired power generation demand. -- Brandon Evans, bevans@spglobal.com

-- Edited by J. Robinson, newsdesk@spglobal.com




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