September natural gas futures values plumbed lower prices on Wednesday before coming rebounding to close the regular session at $4.326, up 2.9 cents from Tuesday's finish. The price action occurred as Tropical Depression 5 became disorganized and dissipated in the northern Gulf of Mexico as it headed northwest toward the southeastern Louisiana coast.
The prompt-month contract traded between $4.257 and $4.376. The 2.9-cent uptick capped the consecutive down-day streak at four.
Citi Futures Perspective analyst Tim Evans attributed Wednesday's rebound to a round of short-covering ahead of Tropical Depression 5 and the weekly storage report release on Thursday. Evans said that while he has seen some higher estimates in the 40 Bcf vicinity for Thursday's report for the week ending Aug. 6, he was sticking with his 30 Bcf estimate.
"We continue to see a supportive intermediate-term environment for natural gas prices, featuring a declining storage surplus and substantial hurricane risk, with the current storm threat only something of a drill," Evans said. "The real action will develop over the next two months, with tropical waves spinning off the coast of Africa roughly every three days, and conditions for development becoming easier."
AccuWeather.com meteorologist Heather Buchman confirmed that Tropical Depression 5 remained disorganized and would likely only bring heavy rains to the coast. "The AccuWeather.com Hurricane Center is predicting the system will pass over the Chandeleur Islands and the easternmost Mississippi Delta of Louisiana Thursday afternoon before final landfall over the Mississippi coast near St. Louis Bay Thursday evening," she said. "Slight variations in this track to the east or west could occur, however."
Taking a closer look at Thursday morning's natural gas storage report from the Energy Information Administration, Bentek Energy's flow model is projecting a 36 Bcf injection, which would bring inventories to 2,984 Bcf. The research firm expects a 32 Bcf injection in the East Region, a 3 Bcf injection in the West Region and a 1 Bcf addition in the Producing Region.
The number revealed Thursday morning will also be compared to last year's 63 Bcf build and the five-year average build of 39 Bcf.
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