August natural gas futures held to the downside Thursday following the U.S. Energy Information Administration (EIA) storage report for the week ending July 5, which outlined a 65 Bcf build, in line with the high end of expectations and above historical averages.
Ahead of the 10:30 a.m. ET print, the prompt month contract was down 4.1 cents at $2.288/MMBtu. August futures barely changed when the EIA data was released. About 20 minutes later, the contract stood at $2.281, down 4.8 cents from Wednesday’s settlement.
Before the report, the median of analyst estimates pointed to a near-seasonal build in the 50s Bcf. A Reuters poll of 14 analysts produced a median injection estimate of 55 Bcf, with responses ranging from increases of 49 Bcf to 65 Bcf.
NGI modeled a 55 Bcf build. By comparison, the year-ago and five-year average builds were each 57 Bcf.
The injection followed natural gas demand during the sample period, which was reduced by the Fourth of July holiday, stronger wind generation, and lighter week/week cooling degree days, NatGasWeather said. The firm said the country’s southern half was hotter than normal, while northern regions, aside from the Northwest, were cooler than normal.
Evans on Energy analyst Tim Evans told NGI the weather provided enough cooling demand to erode the year-on-five-year average surplus. However, it was “not fast enough to clearly exceed the expectations already baked into the price.”
The storage increase lifted inventories to 3,199 Bcf. Stocks remained above the year-earlier level of 2,916 Bcf and the five-year average of 2,695 Bcf. The 65 Bcf build followed a 32 Bcf injection reported for the week ended June 28.
By region, the East led increases with an injection of 22 Bcf. Midwest stocks were up 21 Bcf. In the South Central region, inventories rose 9 Bcf. South Central included an increase of 1 Bcf for salts and a gain of 8 Bcf for nonsalt facilities.
Pacific stocks were up 7 Bcf and Mountain region inventories rose 6 Bcf. The EIA said totals do not always equal the sum because of independent rounding.
Beryl’s Impact
The National Weather Service (NWS) said Thursday “extremely dangerous heat” with widespread heat warnings and advisories would continue in the western United States for the rest of the week. Hazardous heat is forecast to expand over portions of the central and eastern portions of the country into next week and it is expected to persist longer over portions of the Southeast and the East Coast, NWS said.
The hot weather-related demand is expected to butt up against demand destruction from former Hurricane Beryl, which could extend through the next two EIA storage reports, according to EBW Analytics Group senior analyst Eli Rubin. In the Greater Houston area, the hardest hit area by the storm, CenterPoint Energy Inc. said about 1.1 million customers remained without power Thursday. CenterPoint is the city’s largest utility provider.
The Houston-based utility said as of late Wednesday, it had restored power to more than 1.1 million customers impacted by the storm. It expected to have restored power to an additional 400,000 customers by Friday and 350,000 more by Sunday.
Freeport LNG Development LP remained shuttered Thursday. It had shut the liquefied natural gas facility on the Texas coast before Beryl stormed ashore. Nominations have remained at zero, according to East Daley Analytics. Freeport LNG normally receives about 1.9 Bcf/d of gas, the firm said.
East Daley estimated that Beryl had reduced natural gas demand in Texas by about 9.8 Bcf through Wednesday.
Early estimates from Reuters for natural gas inventories for the week ending July 12 ranged from additions of 18 Bcf to 55 Bcf, with an average increase of 38 Bcf. That compares with an increase of 43 Bcf during the same week last year and a five-year average increase of 49 Bcf.
