Further cooler trends in the latest guidance had natural gas futures trading several cents lower early Friday. The August Nymex contract, which expires Monday, was down 4.2 cents to $2.202/MMBtu shortly after 8:30 a.m. ET. September was down 4.4 cents to $2.183.
Bespoke Weather Services lowered its weather-driven demand expectations for the 15-day outlook period by 4.5 gas-weighted degree days (GWDD) heading into Friday’s session.
“Cooler momentum continues in the weather forecast, with a stronger trough in the 11-15 day time frame in the eastern half of the nation,” the forecaster said. “...Model divergence grows,” as the European model “is much hotter in its surface temperature depiction, but is almost certainly too hot given what it shows in the upper level pattern...There is more blocking in the medium range compared to this week, so the cooling should be more northern focused, with the chance for some modest above normal temperatures in Texas.”
As for the latest balance data, Bespoke noted an uptick in production Thursday and Friday, along with recent liquefied natural gas (LNG) feed gas demand totals revised higher.
“Weather-adjusted burns look...weaker today, with initial data on par with yesterday in absolute terms despite higher GWDDs today,” Bespoke said. “Given the balance data and weaker weather pattern, there seems to be little reason to move higher, with increasing risk that we test the lows again soon.”
Meanwhile, the Energy Information Administration (EIA) on Thursday reported an on-target 36 Bcf injection into U.S. natural gas stocks for the week ended July 19, versus a 27 Bcf injection recorded in the year-ago period and a five-year average 44 Bcf build. After a long string of above-normal builds earlier in the injection season, this week marks the second straight EIA report to come in below the five-year average.
Total Lower 48 working gas in underground storage stood at 2,569 Bcf as of July 19, 300 Bcf (13.2%) higher than last year but 151 Bcf (minus 5.6%) lower than the five-year average, according to EIA.
Genscape Inc. viewed the 36 Bcf injection as about 1.1 Bcf/d loose versus the five-year average when compared to degree days and normal seasonality.
“The slight tightening compared to the last couple of weeks is largely due to the bullish impact from...Barry, which had a larger impact on Gulf of Mexico production than demand,” according to the firm.
Raymond James & Associates Inc. analysts said the figure implies the market was 0.1 Bcf/d looser than last year on a weather-adjusted basis, with the market averaging 2.0 Bcf/d looser over the past four weeks.
According to Tudor, Pickering, Holt & Co. (TPH) analysts, “Degree days last week were 10% above normal, and we’ve now had three straight weeks with above normal degree days, which has temporarily halted” the convergence of current storage levels with the five-year average.
“But therein lies the problem,” the TPH team said, “as even strong weather demand isn’t undoing any of the convergence to the five-year average, and with weather normalizing (power burn down 2.8 Bcf/d week/week), we’re expecting a return to above-normal injections with next week’s report.”
September crude oil futures were trading 41 cents higher at $56.43/bbl shortly after 8:30 a.m. ET, while August RBOB gasoline was trading close to even at $1.8809/gal.