Augustnatural gas futures continued to mark time in familiar territory Tuesday, July19, covering a 7-cent range and ending the day just 0.6 cent higher at$2.728/MMBtu.
Findinga range of just $2.717/MMBtu to $2.787/MMBtu throughout the session, thefront-month contract has failed to break a $2.65/MMBtu to $2.80/MMBtu range inmore than a week.
Naturalgas futures continue to alternate between gains and losses. Offering support higher,hotter weather in forecasts should boost demand in the coming weeks and extendthe streak of underperforming storage builds. Offering pressure lower, however,total inventories remain at record highs and could remain well above averageahead of winter.
Inthe latest National Weather Service forecasts, above-average temperatures spanmuch of the U.S., with the exception of the Midwest, in the upcoming six- to10-day period. The heat then overtakes the entire country ineight- to 14-day period.
Naturalgas inventories have been building steadily throughout the injection season butat a pace that lags historical averages, with the most recent storage data fromthe U.S. Energy Information Administration outlining a for the week to July 8.While on the high side of prerelease estimates, the injection was well belowthe 95-Bcf injection reported in the corresponding week in 2015 and the 77-Bcffive-year average addition for the week.
Althoughthe reported injection improved total stocks to 3,243 Bcf, it reduced surplusesto the year-ago level and five-year average to 507 Bcf and 586 Bcf,respectively. The year-on-year overhang has now declined for 14 straight weeks,according to EIA data.
Forthe next weekly inventory report that will cover the week to July 15, mosttraders and analysts are calling for another modest addition to storage of 35Bcf to 40 Bcf, which would compare against the 61-Bcf five-year-average buildand the 70-Bcf injection in the same week in 2015.
Despitethe lackluster pace of storage-building, preliminary estimates for theend-of-season inventories remain hefty. In its latest "Short-term EnergyOutlook," the EIA projected total gas stocks would reach a record-high of4,022 Bcf at the end of October, even with smaller-than-average injections tostorage.
Analystswith Celsius Energy said they estimate that natural gas inventories crossed the3,300 Bcf threshold on July 18. "By the 5-year average, storage levelswould be expected to cross this threshold around September 25 meaning that 2016is 69 days ahead of schedule. This is a slight improvement from one month agowhen storage levels reached 3100 BCF on June 17, 74 days ahead ofschedule," the analysts wrote in a July 19 note.
Incash action, the price of natural gas moved for Wednesday flow was mixed butlittle changed across most of the country.
TranscoZone 6 NY in the Northeast saw some of the biggest losses with average spotprices down about 10 cents to an index below $1.90/MMBtu while TETCO-M3 firmedalmost 5 cents higher to an index near $1.50/MMBtu.
Cashprices also moved mixed on the opposite coast, where daily trades were done apenny or two away from prior-day averages. As Malin drifted lower, closer to$2.70/MMBtu, and SoCal Border firmed above $2.80/MMBtu.
Inthe middle of the U.S., prices moved mostly lower with Chicago down close to 5cents to near $2.75/MMBtu, or about 5 cents below Henry hub, which held firmnear $2.80/MMBtu.
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