November 17, 2011 / 4:09 PM / 8 years ago

U.S. natural gas inventories hit record high-EIA

* Natgas storage eclipses 2010 record, more builds seen

* Total stocks are at 6.2 percent above five-year average

NEW YORK, Nov 17 (Reuters) - U.S. natural gas storage levels climbed last week to an all-time high for the third straight year, according to data released on Thursday by the Energy Information Administration.

The EIA report showed that total domestic gas inventories for the week ended Nov. 11 rose 19 billion cubic feet to a record high 3.85 trillion cubic feet, eclipsing the previous record of 3.84 tcf hit in early November 2010.

(Graphic: link.reuters.com/mup44s)

Mild autumn weather has led to string of above-average weekly inventory builds. Based on current weather forecasts, most traders expect one and possibly two, more weekly injections to drive storage further into record territory before winter withdrawals begin.

Stocks should head into winter near 3.9 tcf, but will still fall well short of EIA’s estimate for peak working gas capacity of 4.1 tcf.

Record-high gas production this year and recent inventory gains after a record hot summer slowed builds helped drive physical gas prices at Henry Hub, the benchmark supply point in Louisiana, to a two-year low this week of $3.11 per mmBtu, down nearly 40 percent since peaking near $5 in June.

Utilities typically build natural gas inventories from April through October, which are then used to meet about 30 percent of winter heating demand.

Gas consumption in the United States roughly averages about 80 bcf per day from November through March.

Total inventories now stand at 224 bcf, or 6.2 percent, above the five-year average.

(Graphic: link.reuters.com/mup44s)

The huge inventory cushion and an additional 360 billion cubic feet of production expected this winter versus last season should mean there will be no supply shortfalls even if winter turns out to be very cold.

Traders said concerns were growing that winter will not be cold enough to burn up excess supplies; that will leave storage at a 20-plus year high near 1.9 tcf at the end of the heating season, which could put prices on the defensive again next year.

REGIONAL BREAKDOWNS

Inventories in the Producing Region climbed to 1.246 tcf, just shy of the previous record high for that region of 1.254 tcf set in November 2010.

Total stocks in the East of 2.094 tcf are also just short of that regional record of 2.101 tcf set in November 2009.

Western region storage at 510 bcf remains below the record high of 526 from 2009. (Reporting by Joe Silha; editing by Andrea Evans)

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