With the broader forecast themes carrying over in the latest guidance, and with the market continuing to digest this week’s government inventory data, natural gas futures were trading close to even early Friday. The August Nymex futures contract was trading 0.2 cents higher at $2.289/MMBtu at around 8:30 a.m. ET.
NatGasWeather viewed the overnight forecast data as mixed, noting slightly cooler trends in some datasets and slightly hotter trends in others. But starting next week and continuing through the end of the month, the outlook is “still not hot enough to intimidate,” according to the forecaster.
“The pattern the next 15 days is still expected to be quite hot through the weekend, cooler east of the Rockies next week, then a bit hotter over the southern U.S. for late July into early August, but still not hot enough elsewhere” to give the pattern “a slight bearish lean after the overnight data,” NatGasWeather said. Even as national cooling degree day (CDD) totals appear likely to return to above-normal levels by late July, “this summer is proving CDDs need to be much above normal” to avoid larger-than-normal storage injections.
“What remains problematic for bulls is even with impressive CDD totals on recent heat, builds are still struggling to come in under five-year averages, highlighting supply versus demand remains strongly out of balance.”
The Energy Information Administration (EIA) on Thursday reported a 62 Bcf build into U.S. natural gas stocks for the week ended July 12, higher than the 46 Bcf build for the year-ago period but slightly below the five-year average of 63 Bcf. This week’s report marks the first below-average build since injections began in March, EIA historical data show.
Total Lower 48 working gas in underground storage stood at 2,533 Bcf as of July 12, 291 Bcf (13.0%) above year-ago levels but 143 Bcf (minus 5.3%) below the five-year average, according to EIA.
“Like Joe DiMaggio’s 56-game hit streak, eventually all streaks come to an end, and this week we ended the above-normal build streak (barely),” said analysts with Tudor, Pickering, Holt & Co. (TPH). “Barry impacts continue to be felt as Gulf of Mexico outputs are the primary driver behind dry gas volumes down around 2.3 Bcf/d from peaks achieved a week prior.
“Next week looks to be another bullish number, as power gen pushes 40 Bcf/d” and liquefied natural gas feed gas demand “continues its strength, averaging 4.9 Bcf/d for the week.”
Genscape Inc. analysts viewed this week’s 62 Bcf injection as indicating the market is about 2.0 Bcf/d loose versus the five-year average when compared to degree days and normal seasonality.
August crude oil futures were trading 41 cents higher at $55.71/bbl shortly after 8:30 a.m. ET, while August RBOB gasoline was up about 1.3 cents to $1.8469/gal.
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