With overnight forecasts offering no major change to the weather outlook, and with analysts predicting a larger-than-average build from this week’s government inventory report, natural gas futures eased lower in early trading Wednesday. The September Nymex contract was off 3.4 cents to $2.137/MMBtu at around 8:45 a.m. ET.

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The latest forecast from Bespoke Weather Services showed no net change in demand expectations based on the overnight guidance.

“The main theme we have seen emerge this month is one with more variability than expected, with the cooler week last week followed by this week’s heat, and another cooler push next week” that is in turn expected to precede a return to hotter temperatures the following week, Bespoke said. “Adding it all up, we still see the month featuring above normal demand as a whole, though less extreme than some of our La Nina analogs had suggested.”

In terms of the supply/demand balance, Bespoke said power burns “continue to look weaker” compared to recent weeks when adjusting for weather.

“Fundamentally, while we maintain our bullish lean longer term, we do not see a reason here and now to move higher, as it appears we are seeing some impact on the demand side from higher prices,” the firm said. This “could get tricky if weather does not deliver higher demand, given that our models are already pointing” to an end-injection carryout of above 4.0 Tcf.

Looking ahead to this week’s Energy Information Administration (EIA) storage report, Energy Aspects issued a preliminary estimate for a 60 Bcf injection. 

The week ending Aug. 7 saw “a combination of comparatively depressed load owing to lower” cooling degree days, “higher nuclear generation on fewer refueling outages week/week and millions of homes in the Northeast suffering power outages from Hurricane Isaias,” the firm said. 

All of these factors combined to lower power burns by an estimated 4.3 Bcf/d week/week during the report period, according to Energy Aspects.

Last year, EIA recorded a 51 Bcf injection for the similar week, and the five-year average is a build of 44 Bcf.

On the supply side, Lower 48 production has fallen more than 2.3 Bcf/d this week, going from 88.9 Bcf/d on Monday to 86.6 Bcf/d for Wednesday, with declines occurring in regions all over the country, according to Genscape Inc.

“The largest drop was in the East, where production fell 1.5 Bcf/d due to maintenance” on the Columbia Gas Transmission (TCO) system in West Virginia, Genscape analyst Josh Garcia said. “Within the East, production fell 730 MMcf/d in Ohio, 250 MMcf/d in West Virginia and 374 MMcf/d in Northeast Pennsylvania.” The TCO outage is set to end on Sunday (Aug. 16).

The Gulf Coast, Texas, the Midcontinent and the New Mexico portion of the Permian Basin have combined to account for the other roughly 800 MMcf/d of declines, according to the analyst.

September crude oil futures were up 87 cents to $42.48/bbl at around 8:45 a.m. ET, while September RBOB gasoline was up about 3.1 cents to $1.2353/gal.