The US Energy Information Administration’s current Short-Term Energy Outlook projects a record build of nearly 2,600 bcf from the beginning of April through the end of October, which would put inventories at 3,431 bcf at the end of October. In line with EIA's expectations, working natural gas storage midway through the summer storage injection season is on pace to for a record overall build.
Following an extremely cold winter, storage inventories at the end of the heating season were only 857 bcf, the lowest level since 2003 and 1,000 bcf below the 2009-13 average. “While the refill season began slowly in April, injections quickly ramped up in May and have substantially exceeded 5-year average levels each week since then,” EIA said.
In the 10 weeks between the week ending Apr. 25 and the week ended July 4, net injections into storage inventories totaled 1.04 tcf, marking the quickest increase since 2003. As a result, the gap between current storage and the 5-year average narrowed substantially. Currently, inventories are 683 bcf below the 5-year average.
Abundant production and moderate demand for gas to generate electricity because of a relatively cool summer contributed to this year’s strong injections, EIA said. As new wells come online in the Marcellus and Eagle Ford shale, gas marketed production has continued to set records and production growth is expected to continue.
In the current STEO, EIA expects that demand from the electric power sector from April through October will remain flat compared with last year, while gas production is about 3 bcfd higher this summer compared with last summer. EIA forecasts that the gap between current and 5-year average inventory levels will continue to narrow over the rest of the injection season.
Continued high levels of production expected through next spring will also help to reduce the need for storage withdrawals over the upcoming winter. As inventories have increased at a record pace, prices have fallen to 6-month lows, EIA said.
