September natural gas was set to open about a penny lower at $2.973 Friday, holding onto most of Thursday's 10-cent gain as overnight weather data showed little to push the market in either direction. Overnight oil markets were down slightly.
The September contract settled at $2.985 Thursday, flirting with the psychological $3 price level after a 10-cent advance following a bullish 28 Bcf storage injection reported by the Energy Information Administration (EIA).
"A 28 Bcf injection into storage is 26 Bcf lower than the five-year average injection for the same week, meaning that the 87 Bcf five-year delta just decreased to 61 Bcf, or by 29%, in one fell swoop," PointLogic Energy's Jack Weixel wrote in a Friday note to clients.
Weixel is forecasting the year-on-five-year average storage surplus will all but disappear by the end of the injection season.
"PointLogic expects the injection rate to average about 63 Bcf over the remaining 13 weeks in injection season, which means that storage inventories will finish the season at 3,854 Bcf, or 7 Bcf below the five-year average for that week."
The supportive fundamentals had the technical bears on the retreat Thursday.
"The bears are not dead yet. But they are running out of room quickly," ICAP's Brian LaRose wrote in a daily technical update following Thursday's gains. "By no means should natural gas be able to creep above $3.100 if the downtrend from $3.431 is intact. Should the bulls manage to lift natural gas above this band of resistance we will have no choice but to abandon the bears for now."
The near-term weather forecast points to near-normal demand over the weekend and into next week, with potential for above-normal temperatures for the last 10 days of August, NatGasWeather.com said in a Friday morning update.
"Most of the overnight weather data was little changed, although the European weather model was notably hotter for the last 10 days of August, which the markets could take notice of," the forecaster said.
"Until then, numerous weather systems with showers and cooler-than-normal temperatures will continue across the central and northern U.S. through early next week. It remains mostly hot over the western and southern U.S., with highs of upper 80s to 100s to drive regionally strong demand, but with the northern U.S. only reaching the 70s to 80s, national gas use will only be near-normal through Tuesday of next week."
September crude oil was set to open at $48.54/bbl Friday, down a nickel, while September RBOB gasoline was up slightly at $1.6089/gallon.