Awaiting the latest storage data for signs of a tightening balance between supply and demand, traders pulled the July Nymex natural gas futures contract lower in early trading on Friday.
The prompt month was off 2.1 cents to $2.720/MMBtu as of 8:50 a.m. ET. August was down 1.2 cents at $2.842.
The U.S. Energy Information Administration (EIA) is set to issue the storage report for the week ending June 14 at 10:30 a.m. ET Friday, one day delayed because of the Juneteenth holiday. The data is expected to outline a comparatively small build.
NGI modeled an increase of 69 Bcf. That compares with a five-year average increase of 83 Bcf. Injection estimates submitted to Reuters for the June 14 week spanned 64 Bcf to 80 Bcf, with a median increase of 69 Bcf. Bloomberg’s poll found the same range and median.
The modest injection would follow EIA’s last reported build of 74 Bcf for the first week of June. That print was shy of the five-year average of 83 Bcf and left inventories 24% above historical norms. Still, the surplus to the prior five years dwindled from around 40% in March.
NatGasWeather noted that even as the next four to five government inventory reports are expected to print smaller than normal builds, the gradual reduction may bring surpluses from 573 Bcf toward 450 Bcf, “which is still quite hefty.”
“Essentially, it’s going to take time for surpluses to dwindle down, but the expectation is they will be closer to 200-250 Bcf by mid to late fall,” the firm said.
Putting a wrench in that expectation, the Atlantic hurricane season officially began June 1, and has, as forecasters predicted, been active thus far.
The National Hurricane Center (NHC) was tracking an area of low pressure with a 50% chance of forming into a tropical depression over the next two days in the southwestern Gulf of Mexico. Another area of thunderstorms, with a low-pressure system east-southeast of Jacksonville, FL, also had a 50% chance of forming into a “short-lived” tropical depression, NHC said. The system was expected to reach the coast of northeastern Florida or Georgia by late Friday.
Hurricanes have become demand-side stories, as soaking rains typically drive down temperatures and sap demand for cooling. That was evidenced in Texas, which experienced flooding rains starting late Wednesday from former Tropical Storm Alberto.
While heavy showers remained over East Texas, much of the state was expected to warm back into the 90s to 100s the next several days, according to NatGasWeather. The next tropical system was set to bring more rain to South Texas.
Forecasts showed the Pacific Northwest warming over the next several days into the 80s and 90s, then cooling to start next week.
From June 28 to July 5, a hotter-than-normal pattern was forecast for most of the United States. Highs are forecast in the 80s to lower 90s over the northern reaches and upper 80s to 100s over the southern portions of the country. NatGasWeather said the hottest weather conditions were expected from California to Texas.
