Taking the lead from the June gas contract that rolled off the board ahead of the long weekend with a 5.2-cent gain at a finish at $3.236/MMBtu, NYMEX July natural gas futures were tethered to the downside in overnight trading leading up to the Tuesday, May 30, open amid fundamental weakness. At 6:37 a.m. ET (1037 GMT), the fresh front-month contract was 11.7 cents lower at $3.193/MMBtu.
"The shoulder season just does not seem ready to move on keeping the higher demand summer cooling season at bay until at least the middle of June over the eastern half of the USA," Energy Management Institute Principal Dominick Chirichella said in a May 29 note.
The latest National Weather Service forecast maps for the six- to 10-day and eight- to 14-day periods show average and below-average temperatures blanketing nearly the entire central and eastern U.S., while above-average temperatures are reflected for a majority of the West, a small area of the Midwest and southern Florida.
Average and below-average temperatures in store for major demand centers in the country's eastern two-thirds should limit demand for either heating or cooling given the calendar, which should allow for natural gas to flow more freely into underground storage facilities and encourage an uptick in the rate of weekly inventory injections.
"With the lower demand shoulder season still dominating the Nat Gas horizon weekly injections over the next several weeks are likely to be at least around the historical levels for the same period if not higher," Chirichella said.
In its most recent storage data, the U.S. Energy Information Administration detailed a net 75-Bcf injection to stocks for the week that ended May 19 that was above the 71-Bcf build seen in the corresponding week in 2016 but below the 90-Bcf five-year average addition. It took total working gas stocks to 2,444 Bcf, or 371 Bcf below the year-ago level but 241 Bcf above the five-year average of 2,203 Bcf.
Adding to pressure on futures, the latest rig count data portends an improvement in natural gas production that fuels the possibility of an acceleration in the pace of storage-building further out.
The total U.S. rig count jumped by seven week over week to reach 908 during the week that ended May 26, up 504 relative to the year-ago level, according to Baker Hughes Inc.'s latest North America Rotary Rig Count. Oil rigs that totaled 722 were up by two versus the prior-week, while gas rigs that totaled 185 reflected a gain of five rigs week on week.
Larger storage builds likely in store should keep overall inventories on track to reach near record highs, with just about 10 Bcf/d of injections needed over a little more than five months to add 1.8 Tcf to the total working gas supply.
At the cash markets, traders on May 26 moved a revised natural gas offering for Saturday-through-Tuesday flow at predominantly softer values amid pressure from the inclusion of the low-demand weekend days and Memorial Day holiday in the altered package.
Among the key hubs, the charge to the downside was led by Transco Zone 6 NY spot gas price activity that notched an almost 35-cent decline in transactions averaging at $2.375/MMBtu. Chicago day-ahead gas pricing followed with a near 6-cent slump to an index at $2.958/MMBtu, then PG&E Gate hub action that unraveled about 5 cents to average at $3.368/MMBtu. Defying the broad retreat, benchmark Henry Hub cash gas prices advanced by roughly 4 cents on average to an index at $3.135/MMBtu.
Regional averages were weaker overall. Northeast next-day gas pricing deflated by around 17 cents on the session to average at $2.620/MMBtu, as Midwest spot gas price action faltered by near 3 cents to an index at $2.904/MMBtu. West Coast cash gas price activity fell by 10 cents to an index at $2.706/MMBtu, as Gulf Coast day-ahead gas pricing logged a scant less-than-1-cent reduction as it averaged at $3.003/MMBtu.
Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power and natural gas index prices, as well as forwards and futures, visit our Commodities Pages.