The Platts pre-report analyst survey suggests U.S. EIA data will show a 70 to 74 Bcf build to natural gas stocks for the latest reporting week

Washington - July 29, 2009

The U.S. Energy Information Administration (EIA) on Thursday is expected to report an addition of between 70 and 74 billion cubic feet (Bcf) to natural gas storage inventories for the week that ended July 24, according to a Platts survey of analysts.

An injection within those expectations would come in above last year's 68-Bcf build, and the five-year-average injection of 51 Bcf, according to EIA.

As a result, the year-on-year surplus--568 Bcf as of the week that ended July 17 and the 458-Bcf surplus over the five-year average—will likely expand.

The wider range of analyst expectations spanned from builds of 64 Bcf to 77 Bcf.

Martin King, vice president of institutional research at FirstEnergy Capital, said although temperatures moderated further in many parts of the U.S. East and South, the heat in the West intensified last week, based on the number of cooling degree days. Natural gas is a prominent fuel used for electricity and air conditioning.

"In fact some of the storage sites in the West from which we pull data, showed almost continuous withdrawals last week," he said. King projected that storage in the West would fall by 4 Bcf.

King said the report will firmly place U.S. natural gas storage above 3 trillion cubic feet (Tcf), and with one reporting week still left in the month of July.

"This by far [will be] the earliest storage has ever reached the 3-Tcf threshold," he said.

King, however, said he feels the evidence has indisputably tilted toward a steadily tightening U.S. gas market on a weather-adjusted basis, and that weather should play a bigger role during August since August 2008 was a "fairly cool affair.”

As such, he said, “We expect that the enormous storage surplus that has built up over the past few months should erode more significantly over the course of the coming month.”