Even with drillers packing up the rigs (despite a recent rig count increase) and energy demand dropping off, the U.S. just keeps filling up its natural gas storage system at a record pace.
There’s a positive side to this in that its leading some utilities to cut their gas costs and helping bring down electricity prices (although lower wholesale power prices don’t always trickle down to consumers, particularly in Texas).
The storage trend line is well above the average range as the heaviest injection weeks lie ahead. (Courtesy of Simmons & Co.)
Analysts are starting to wonder when it’s going to stop.
“Continue to worry about storage injection issues around Labor Day (5 weeks away; typically largest injection of Aug-Oct time period),” the folks at Tudor Pickering Holt wrote in a recent research note.
At Simmons & Co. they note last week’s storage injection numbers were “above the build last year (56 bcf), above the 5 year average (42 bcf build), and above the Bloomberg consensus estimate (60 bcf build),” and “… the issue of reaching full storage capacity is becoming more of a reality.”
Societe Generale predicts the storage injection numbers out this week will continue to be well above the five-year average but injections through the end of the month should be “more normal.” But even then: “If injection levels remain at the 5-year average for the rest of the injection season, storage levels will reach 3.9 Tcf by October 29.”
That would be a record.
Platt’s now says its survey of analysts predicts an injection of between 65 and 69 billion cubic feet:
“A build within those expectations would be larger than both last year’s 51-Bcf build and the five-year-average injection of 42 Bcf, according to EIA. As a result, the 580-Bcf surplus over last year and the 493-Bcf surplus over the five-year average will likely expand.”