Coming off six straight lower sessions, August natural gas futures were wavering between gains and losses early Wednesday ahead of an expected light build in the weekly government inventory report.
The August Nymex contract was up 1.7 cents to $2.452/MMBtu at around 8:40 a.m. ET.
The U.S. Energy Information Administration (EIA) was scheduled to release its storage print at 12 p.m. ET Wednesday, a day early because of the Fourth of July holiday.
A Reuters survey showed analysts expected a build of between 22 Bcf and 35 Bcf, with a median of 33 Bcf. NGI modeled a 29 Bcf build for the latest EIA report that covers the week ended June 28.
After EIA reported an in-line injection of 52 Bcf for the prior week, the surplus of gas in Lower 48 underground storage stood at 528 Bcf, or 20.6% above the five-year average. Eight of the last 10 weekly prints have lagged the historical average, narrowing the surplus from 37% in mid-April.
The relatively light expected build is due to hotter-than-normal temperatures over most of the Lower 48 during the report week, with the Midwest as the main exception, NatGasWeather said.
The American weather model added cooling degree days (CDD) to the outlook overnight and was advertising a net increase of 2 CDDs over the prior 24 hours, while the European model subtracted 4 CDDs, according to the firm.
That cooler outlook continued a trend for forecasts over the past two weeks. Eight out of the past 10 days have featured milder forecast revisions, according to Mobius Risk Group analysts. Those revisions, along with hurricane risks, inventory concern and still sluggish power demand have acted as headwinds for futures, the firm said.
Hurricane Beryl, downgraded to a Category 4 storm, was expected to weaken further after it passed near Jamaica on Wednesday and the Cayman Islands tonight or early Thursday, the National Hurricane Center (NHC) said.
Beryl’s probable path puts it on track to cross Mexico’s Yucatan Peninsula on Friday and make landfall in Mexico or South Texas by Monday, NHC data show.
Some weather models put the storm’s track as far north as Corpus Christi, Wood Mackenzie analysts said.
“Near-term weather continues to underperform, shedding an incremental 17 CDDs over the past week to allow Nymex futures to sag below the $2.50 threshold,” EBW Analytics Group analyst Eli Rubin said.
After the holiday, rebounding heat and post-holiday demand “may lead to rising power burns and stem the bleeding for natural gas,” Rubin said. The next four EIA storage weeks may average 99 CDDs/week, he said.
