Hotter trends in the overnight guidance helped send natural gas futures sharply higher in early trading Tuesday. As of 8:50 a.m. ET, the August Nymex contract was up 6.9 cents to $3.848/MMBtu.
The American and European weather models trended hotter overnight for next week, adding 2-3 cooling degree days to the outlook, according to NatGasWeather.
“National demand will increase late this weekend through next week as strong upper high pressure over the western and central U.S. expands eastward, with highs of upper 80s and 90s gaining ground,” the firm said. “Overall, the next five days remain seasonal/neutral,” but the pattern turns “bullish for the six- to 15-day period as upper high pressure gains territory over the eastern half of the U.S.
“The overnight weather data teases cooler air attempting to push into the northeastern U.S. around Aug. 2-4, although a bit too far out to expect it,” NatGasWeather added. “As such, the back end of the 15-day forecast maintains a bullish lean until the weather data shows stronger bouts of cooling into the northern U.S.”
Meanwhile, looking ahead to Thursday’s Energy Information Administration (EIA) storage report, Energy Aspects issued a preliminary estimate for a 31 Bcf build.
The firm estimated a 2 Bcf/d week/week gain in industrial demand following holiday impacts in the previous report week, as well as a 2 Bcf/d week/week increase in power burns. Those demand gains were partially offset by a 0.5 Bcf/d week/week increase in production, according to the firm.
In a recent note to clients, Energy Aspects said its balances show the end-October storage carryout approaching 3.5 Tcf. This level “may look light if gas’ high share in thermal generation continues beyond peak summer.”
The current pricing environment is likely partially “influenced by the perception that production is light behind the pipe,” the firm added. The Haynesville Shale’s “muted response to higher cash prices will keep productions somewhat range-bound in the short term, with recent movement more tied to maintenance activity than an activity-driven increase.
“Permitting data suggest that there will be an uptick in output, particularly from the Haynesville, but Appalachia will continue to be hamstrung by a lack of new major infrastructure additions.”
August crude oil futures were down 11 cents to $66.31/bbl at around 8:50 a.m. ET.
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