Natural gas futures traded upward early on Thursday as the market awaited the latest government inventory data.
The September Nymex natural gas futures contract was up 3.4 cents to $2.070/MMBtu at around 8:40 a.m. ET.
With forecasts for robust August heat countered by continued strong production readings, traders treaded water in anticipation of the 10:30 ET Energy Information Administration (EIA) storage report.
A bullish or bearish print could tilt the market’s direction, said Rystad Energy analyst Masanori Odaka.
“Stronger demand will help cushion the market from elevated supply levels,” Odaka said. “Yet it is important to note that demand has struggled to make a dent in weekly storage,” which was 16% above the five-year average ahead of today’s EIA print.
Analyst expectations straddled both sides of the line dividing bulls and bears.
Estimates submitted to Reuters for the week ended July 26 ranged from builds of 22 Bcf to 45 Bcf, with a median of 31 Bcf. NGI predicted a 29 Bcf injection. The prior five-year average increase was 33 Bcf.
EIA reported an injection of 22 Bcf natural gas into storage for the week ended July 19. It increased stocks to 3,231 Bcf, putting inventories far above the five-year average of 2,775 Bcf.
Looking at Thursday’s fundamentals, Wood Mackenzie estimated production at 102 Bcf/d. That was down about 1 Bcf/d from a summer high reading above 103 Bcf/d a day earlier. However, beginning of the month readings tend to be revised. Even if that were not to happen, Wood Mackenzie’s Thursday estimate was in line with the 30-day average and up substantially from spring lows in the 90s Bcf.
On the demand side of the equation, National Weather Service forecasts called for a hot start to August and most of the month, with vast expanses of the country enduring highs in the 90s and 100s for elevated cooling demand.
Additionally, AccuWeather’s long-range forecasters said summer heat is expected to last well into autumn across most of the Lower 48.
“Fall is going to feel more like an extended summer for millions of Americans this year,” said AccuWeather meteorologist Paul Pastelok. “Much of the country will experience a delayed transition to cooler temperatures this year, following a summer with intense heat.
“We’ve seen record-high temperatures shattered in several cities across California, Nevada, Oregon, Utah and North Carolina this summer. We could see more record temperatures this fall.”
The AccuWeather fall forecast predicted temperatures would hover 1-to-3 degrees above the historical average for most of September through November. The firm said even higher temperature departures were expected across parts of the Great Lakes region, the Midwest and the Rockies.
Forecasters said the only areas where above-historical average temperatures were not expected this autumn were along coastal areas in the Southeast and West.
