EIA sees record US stocks, high output

OREANDA-NEWS. September 08, 2016. US natural gas inventories should reach an all-time high ahead of winter as production rebounds from lows recorded earlier this year.

Domestic stockpiles of the heating and power plant fuel will reach 4.042 Tcf (115bn m?) by the end of the injection season on 31 October, the US Energy Information Administration (EIA) said today in its monthly Short-Term Energy Outlook.

US gas inventories have been in the spotlight this summer as low prices and hotter-than-normal weather drove gas demand from the power sector to record highs and recent government data indicated that production was declining. The EIA has maintained that stockpiles will hit a new record this year even as some analysts projected that inventories would fall short of that mark, reaching 3.9 Tcf or lower by winter.

Injections into gas storage since 1 April have totaled 921 Bcf and have lagged the five-year-average refill rate by 37pc. Inventories in the week ended 26 August were still at 3.401 Tcf, 11pc above the five-year average, thanks to the unusually mild 2015-16 heating season.

The winter heating season traditionally starts on 1 November but climbing US production has usually allowed stockpiles to increase past that date. Production this year will probably increase by a more modest amount than the year-over-year gains made in 2015 because slumping gas prices and lower levels of drilling activity.

Marketed natural gas production, which excludes amounts lost during processing and production, fell in June to 77.5 Bcf/d, down by 2.7 Bcf/d from the all-time high in February, according to the EIA.

The agency said today that preliminary data indicates that gas output increased in July and August. The EIA is also projecting that marketed production in 2016 will average 79.21 Bcf/d, up by 0.6pc from 2015.