Natural gas futures mustered momentum on Tuesday – after losing ground the day before and last week – amid lighter production readings, bargain buying and short covering.
Here’s the latest:
- September Nymex natural gas contract trades up 7.9 cents to $2.021/MMBtu as of 2:30 p.m. ET
- Production slips during pipeline cleaning and inspection projects
“The move upwards today may be driven largely by participants covering short positions” amid oversold conditions, analysts at Gelber & Associates said.
However, they noted the market has watched production closely, with bulls looking for a pullback in order to lower storage surpluses relative to historical averages.
Wood Mackenzie estimated natural gas production on Tuesday at 100.4 Bcf/d, down from the seven-day average of 102.5 Bcf/d because of maintenance events across the Permian Basin in Texas, North Louisiana and the Northeast.
For Thursday’s Energy Information Administration (EIA) inventory report, covering the week ended Aug. 2, early injection estimates submitted to Reuters averaged 30 Bcf, matching NGI’s prediction. The estimates compared bullishly with a five-year average increase of 38 Bcf.
Underground stocks finished the last full week of July at 3,249 Bcf, or 16% above the five-year average, according to EIA.
- Weather forecasts vary by region, creating uneven demand outlook
While lofty temperatures in the 90s and 100s were forecast to endure this week across large areas of the South and West, National Weather Service (NWS) data showed cooler air and highs in the upper 60s to 70s gaining ground over the Northern Plains and the Great Lakes this week. Such conditions were expected to expand over more of the Midwest and Northeast into the next week.
Additionally, NWS forecast that the remnants of former Hurricane Debby would last through the current week. Debby made landfall early Monday in Florida as a Category 1 storm, delivering drenching rains and flooding on top of widespread power outages. While downgraded to a tropical storm, it could track up the coast to the Northeast this week, bringing cooler temperatures along with it, NWS data showed.
Spot prices varied widely, according to NGI’s MidDay Price Alert. After rallies in recent days, prices pulled back in the Westm but climbed in Texas and parts of the South. A mix of small gains and losses peppered the Midwest and Northeast, leaving the national average in limbo.
- NGI’s Spot Gas National Avg. registers $1.645, down a half-cent
- California Regional Avg. off 22.0 cents to $2.420 at midday
AccuWeather meteorologists, meanwhile, warned that Debby would warrant close monitoring. They said Tuesday that millions of residents were under flood watches and warnings from Florida to Georgia and South Carolina.
AccuWeather Chief Meteorologist Jon Porter said Debby’s impacts could intensify again once it settles along the East Coast.
“We’re just getting started,” Porter said. “We expect that Debby is going to evolve into a major flooding disaster across parts of the Southeast…We’re facing serious rain and storm surge threats in the coming days.”
