FIRST TAKE: Record US gas storage fill in May BEARISH for Henry Hub today (but bullish tomorrow) Luke Larsen *US storage levels reach 2.6 Tcf following May’s record-setting month of injections, which totaled almost 500 Bcf *May injections bring inventories to a level nearly 100 Bcf above the five-year average, but for the rest of the decade, excess storage at the end of May should be a “new normal” as the US natural gas market evolves *Growth of US production rates to meet expanding LNG export demand will require increased reliance on storage utilization going ahead, meaning larger injections during transition summer months along with stronger withdrawal rates during peak winter Current Henry Hub futures for July delivery are at a crossroads as the market grapples with modest June demand levels underwriting weak cash prices that have incentivized robust storage injections throughout the last several weeks. However, with July currently testing higher levels near $3.75/MMBtu, adding to this week’s nearly 7% rebound in value, a bearish opinion foundationally built on the past is perhaps not the wisest move at this juncture. The June 5 EIA storage report for the week ended May 30 showed that US working gas inventories expanded to 2,598 Bcf during the final full week of May. Storage injections data for the four full weeks of May 9 to May 30, plus estimates of injections at the start and end of the month, suggest total injections for the month reached 498 Bcf, surpassing the record established in May 2015 -- when Lower 48 production was 73 Bcf/d and the US was still almost a year away from exporting its first LNG cargo. While this record injection is a bearish fundamental development from a forward price perspective, elevated stockpiling rates during transition months such as May are going to become the norm as they combine reduced demand, growing US production levels, and the inherent volatility associated with midseason power generation and LNG feedgas requirements. This highlights the value of additional storage capacity. Our latest short-term outlook, published May 22, suggests that May storage injections are set to average almost 550 Bcf over the next five years. Read on PlattsConnect: https://tinyurl.com/4az493hu