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November gas remains weak amid storage, weather pressure

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November gas remains weak amid storage, weather pressure

Afterending its first day in the lead slot Thursday down 4.3 cents at $2.959/MMBtu, thefresh front-month November natural gas futures contract remained anchored overnightahead of the Friday, Sept. 30, open, by robust inventories and the anticipationof moderating weather moving deeper into the fall season that should dampen demand.Extending losses to trade as low as $2.931/MMBtu, the contract managed to push intoshallow positive territory at last look, trading 0.6 cent higher on the sessionat $2.965/MMBtu, in muted trade.

Totalworking natural gas in storage currently sits at 3,600 Bcf, or still 90 Bcf abovethe year-ago level and 220 Bcf above the five-year average of 3,380 Bcf, after theU.S. Energy Information Administration outlined a 49-Bcf injection for the week to Sept. 23 that was belowestimates and historical averages.

The reportedaddition to stocks was a downside miss against the full range of coming into the day that had calledfor a build of anywhere from 50 Bcf to 59 Bcf and an average injection of 54 Bcf,and was significantly lower than both the 97-Bcf five-year average build and the99-Bcf injection seen in the corresponding week in 2015.

Althoughthe week's data extended the slower-than-normal pace of storage-building that hasdominated the refill season thus far and resulted in a steady erosion of stock overhangs,overall inventories remain elevated versus historical averages and on the path towhat is expected to be a record-high end-of-season level.

The calendararrival of the fall shoulder season supports anticipation for healthy end-of-seasoninventories, as milder conditions associated with the season looks to sap demandin the coming weeks and free up natural gas for storage-building.

The NationalWeather Service sees above-average temperatures engulfing the entire East, the bulkof the central U.S. and fringes of the West in the upcoming six- to 10-day period,before expanding to overtake a larger portion of the country's midsection and mostof the West further out to the eight- to 14-day period. Average to below-averagetemperatures span much of the West and parts of the central U.S. in the shorter-rangeperiod, but below-average temperatures disappear and average temperatures becomecontained to a section of the West and a small area of the central U.S. in the longerrange.

Weatheras forecast supports lingering cooling demand amid sustained warming over the easternhalf of the country through early October, yet the calendar suggests lower hightemperatures that should help eliminate late-season cooling load and allow naturalgas inventories to build at a more rapid pace ahead of the peak winter heating season.

Preliminaryestimates for the next weekly storage data that will cover the current week to Sept.30 call for an uptick in the rate of weekly injections to the low 70s Bcf, whichwould compare against the 95-Bcf five-year average build and the 96-Bcf year-agoaddition to stocks. Although the underperformance against historical averages woulddrive a further erosion of storage overhangs, the improvement in overall stocksand additional mild weather ahead should continue to fuel bearish sentiments.

In cashactivity, the price of natural gas booked Thursday for Friday flow was tetheredto the downside in much of the country, as milder weather that looked to dampendemand combined with losses at the futures arena.

Acrossthe key hubs, the charge lower was led by Transco Zone 6 NY day-ahead gas pricingthat tumbled by roughly 23 cents to an index at 64.3 cents/MMBtu. Benchmark HenryHub cash gas price action followed with a near 5-cent decline in deals averagingat $2.978/MMBtu, then PG&E Gate spot gas pricing that unraveled almost 3 centsto average at $3.386/MMBtu and Chicago next-day gas prices that faltered by about2 cents on average to an index at $2.845/MMBtu.

Regionally,Northeast spot gas price activity deflated by almost 12 cents to average at $1.682/MMBtu,as Gulf Coast day-ahead gas prices eased by about 2 cents on average to an indexat $2.815/MMBtu. West Coast next-day gas pricing slumped by roughly 4 cents in transactionsaveraging at $2.663/MMBtu, as Midwest cash gas price action advanced by nearly 1cent against the broad downtrend to an index at $2.819/MMBtu.

Marketprices and included industry data are current as of the time of publication andare subject to change. For more detailed market data, including power andnatural gas indexprices, as well as forwards and futures, visitour Commodities Pages.