US natgas storage continues climbing after 64 bcf injection

01 October 2009 17:15  [Source: ICIS news]

HOUSTON (ICIS news)--US natural gas inventories rose by 64bn cubic feet (bcf), bringing stocks closer to the estimated domestic peak, according to statistics released on Thursday by the Energy Information Administration (EIA).

The weekly report puts total US working storage at 3,589 bcf, within 8% of the EIA's projection that cumulative US natural gas storage would top out at 3,889 bcf.

Natural gas futures on the NYMEX were down more than 25 cents before the government report was released at 10:30 hours New York time (14:30 GMT) and losses continued as prices fell to $4.522/MMBtu, a 31.9-cent drop, shortly after the EIA's data came out.

NYMEX December contract prices decreased by 29.7 cents to trade at $5.377/MMBtu.

Last week's injection fell between analysts' expectations of 57-67 bcf. It was also just below the five-year average of 68 bcf during the same week and well below the storage increase of 87 bcf in 2008.

Front-month trading moved to November contracts on 29 September and jumped more than a dollar from October prices on prospects of heating demand as winter approaches the US northeast region.

But the immense storage figures have pared away at November contract prices.

"At this point, we are confident gas in the [Gulf of Mexico] and west will virtually max out capacity and gas in the East will come within 6% of capacity," Stephen Schork, editor of the energy newsletter The Schork Report said earlier in the week.

"All told, we think gas will come within 3% of overall capacity [3,790 bcf]. And that is being conservative."

Despite underground storage bursting at the seams, gas rig counts in operation increased slightly during the week of 25 September, according to the oil and gas services giant Baker Hughes.

Weekly operating gas rigs rose by five during the week to 710, but are still well below the 1,559 rigs running during the same week in 2008.

Natural gas prices are important for the petrochemical industry as the fuel is widely bought to be used as a feedstock and power fuel.

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By: Ryan Hickman
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