The Platts pre-report analyst survey suggests U.S. EIA data will show an 108 to 113 Bcf addition to natural gas stocks for the latest reporting week

Washington - May 27, 2009

The U.S. Energy Information Administration (EIA) on Thursday is expected to report an addition of between 108 and 113 billion cubic feet (Bcf) to natural gas storage inventories for the week that ended Friday, May 22, according to a Platts survey of analysts.

An injection within those expectations would come in larger than both last year's 87-Bcf build and the five-year-average injection of 91 Bcf, according to EIA. As a result, the year-on-year surplus of 514 Bcf and the five-year-average surplus of 387 Bcf each are likely to expand.

The wider range of analyst expectations spanned from an injection of 98 Bcf to 119 Bcf. EIA estimated a 103-Bcf build for the week that ended May 15.

"Generally cool weather across many regions, other than the [U.S.] West, still slack industrial demand, and a winding down of many other industrial and commercial operations into the Memorial Day long weekend, has pushed us to this rather sizeable injection estimate," said FirstEnergy Capital analyst Martin King, adding that his own estimate of 112 Bcf "may prove to be too low."

Market observers are beginning once again to brace for ample supplies and potentially aggressive injections heading into the summer. King indicated that storage injections for all of May could top 450 Bcf, which would push up his end-of-October estimate of 3.725 trillion cubic feet (Tcf).

Strategic Energy & Economic Research analyst Ron Denhardt was even more bearish, indicating that storage could theoretically end the injection season between 4 Tcf and 4.3 Tcf -- above estimated full working capacity of 3.8 Tcf.

Under several models, "any one of these scenarios would require substantial production being shut in," Denhardt said. "This will require Henry Hub prices to decline to $3/MMBtu or less by September."