Prompt month natural gas futures tripped lower in early trading Thursday as weather forecasts turned a bit cooler and the Tropics heated up.
The natural gas storage report, usually issued on Thursdays, was delayed until Friday because of the Juneteenth holiday.
The July Nymex contract was down 6.7 cents to $2.842/MMBtu at 8:45 a.m. ET and August was down 7.0 cents to $2.920.
Follow hotter trends on Wednesday, “the overnight weather data trended a little cooler,” NatGasWeather said. The American weather model lost about 6 cooling degree days (CDD), while the European model lost 7 CDD. However, the firm said both continued to forecast a “hotter than normal” pattern for the next two weeks and predicted it would be the hottest of the past 45 years.
Power burns expected at 45.1 Bcf/d Thursday were up with the mercury, Wood Mackenzie data showed. Power burns were “coming in strong” with heat in the Midwest and Pennsylvania-New Jersey-Maryland area this week, the firm said.
Wood Mackenzie analysts pointed to the European model, which showed a “little break around day 10. “But the ridge should rebuild soon after across the Plains, Midwest and Texas.”
Demand for cooling may be sapped by activity in the Tropics, where three systems were churning.
The first named storm of the Atlantic season, Tropical Storm Alberto, made landfall in Mexico early Thursday. The storm “remains a large system and continues to produce moderate coastal flooding across portions of southern Texas,” the National Hurricane Center (NHC) said. Alberto was expected to move inland through the day.
Meanwhile, NHC said a disturbance in the southwestern Gulf of Mexico had a 20% chance of further development through the weekend. The system was expected to move slowly to the west-northwest or track only northwest.
NHC also was tracking an area of low pressure about 150 miles east of the northernmost Bahamas. The system had a 40% chance of further development. Early Thursday, it continued to produce disorganized shower and thunderstorm activity, NHC said.
Environmental conditions were “marginally conducive for further development, as the system was forecast to move west-northwestward at 10- to 15-mph and approach the northeastern coast of Florida or the Georgia coast by early Friday.
With keen eyes on the weather, the latest U.S. Energy Information Administration (EIA) storage data may prove the next major price catalyst.
For the EIA storage print covering the week ended June 14, NGI modeled an increase of 69 Bcf. Preliminary injection estimates submitted to Reuters for the week spanned 56 Bcf to 91 Bcf, with an average increase of 69 Bcf. If realized, that would compare bullishly with a five-year average increase of 83 Bcf.
For the first week of June, EIA reported an injection of 74 Bcf. That was lower than the five-year average of 83 Bcf. Inventories finished the week 24% above the average of the prior five years, but the surplus dwindled from around 40% in March.
“The next four or five EIA weekly storage reports are expected to print smaller than normal builds to gradually reduce surpluses from about 573 Bcf toward 450 Bcf, which is still quite hefty,” NatGasWeather said.
“Essentially, it’s going to take time for surpluses to dwindle down, but the expectation is they will be closer to plus-200-250 Bcf by mid to late fall.”
