With widespread and intensifying heat gripping the Lower 48, natural gas futures advanced early Friday but could not hold gains into afternoon trading. Spot prices dropped.
Here’s the latest:
- September Nymex natural gas contract trading down eight-tenths of a cent to $1.960/MMBtu as of 2:20 p.m. ET
- Forecasts call for some of the hottest weather of the summer in early August
NatGasWeather said both the American and European models on Friday advertised “very strong national demand through” the weekend and into the week ahead “as hot high pressure rules most of the U.S. with highs of upper 80s to 100s.”
The firm noted exceptions late in the next trading week “as weather systems track across the Midwest, Ohio Valley and New England with highs of 70s to lower 80s.” Still, it “will still be quite hot over much of the western and southern U.S. with highs of 90s-100s and why national demand is expected to still be relatively strong.”
At the same time, production showed signs of easing off of summer highs near 103 Bcf/d. Wood Mackenzie estimated production on Friday at 101.8 Bcf/d, down from the seven-day average of 102.5 Bcf/d.
The combination of increased demand and lighter production could help to lower storage surpluses.
The U.S. Energy Information Administration (EIA) on Thursday reported an injection of 18 Bcf into storage for the week ended July 26. It was far below the 31 Bcf median found by a Reuters poll. NGI modeled a 29 Bcf increase. The EIA result compared with a five-year average build of 33 Bcf.
Yet the print left inventories 16% above the five-year average.
Looking ahead to the next EIA print for the week ending Aug. 2, preliminary estimates submitted to Reuters ranged from injections of 11 Bcf to 39 Bcf, with an average increase of 30 Bcf.
- U.S. LNG export terminals scheduled to receive around 13 Bcf of feed gas Friday, up about 1 Bcf day/day, per NGI data
- A brewing tropical wave adds a potential bearish wrinkle as it heads toward the Lower 48 early in the week ahead
While liquefied natural gas volumes steadied over the past week, a tropical system “tracking towards western Florida and the Gulf of Mexico” as soon as early next week threatens to usher in cooling rains and strong winds that could cause power outages, NatGasWeather said. Both effects could dampen demand from Florida to Texas.
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“This system is expected to gradually strengthen before making landfall into the U.S. and where impacts are more likely to play out bearish than bullish,” the firm added.
- NGI’s Spot Gas National Avg. fell 14.5 cents to $1.630, according to MidDay Price Alert
- Florida Gas Zone 3 shed 31.5 cents to $2.155
The looming storm did curb prices in the Southeast, and profit-taking hindered the overall cash market even as utilities braced for a sizzling weekend and more heat ahead. The loftiest temperatures were forecast for the deserts of California and the Southwest, yet prices fell Friday in both regions to weigh on the national average.
