NYMEX September natural gas futures spent the week's closing session consolidating after an impressive gain that halted a four-day winning streak. The contract settled in shallow negative territory, down 0.2 cent at $2.983/MMBtu, after trading a range of $2.962/MMBtu to $2.993/MMBtu Friday, Aug. 11.
The latest injection into natural gas inventories of just 28 Bcf supported a 10.2-cent gain on Aug. 10, as the total supply built to 3,038 Bcf, but the year-on-five-year-average surplus shrunk to just 61 Bcf.
The shrinking of the closely watched surplus implies a tightening of the supply demand balance that helped the market higher, while overall health of inventories still expected to reach a near record high by the end of October helped keep the downside alive.
Participants are watching weather developments to provide additional support for more substantial moves higher or lower, and forecasts for the upcoming six- to 10-day and eight- to-14 day periods imply some strengthening demand that could limit storage builds going forward.
The latest revisions to weather maps from the National Weather Service show above-average temperatures blanketing nearly the entire U.S. in the near-term period. Only a large portion of the Northwest and small areas of the north central and southern California are expected to see below-average temperatures.
The longer-range outlook shows similar conditions, with the majority of the country under above-average temperatures and below-average temperatures expanding across a broader area of the central U.S.
As forecast, heat in the major cooling east and central regions should prop up demand and limit the amount of natural gas available to store away for the winter peak heating season, as utilities are called upon to meet customer cooling load.
A slower rate of storage injections could threaten outlooks for an end-of-October inventory atop 3,900 Bcf.
Also in weather, activity in the tropics is picking up, with two systems currently being monitored by the National Hurricane Center. The systems are not expected to have any major impact on the U.S. in the coming days, but serve as a reminder that hurricane season is in full swing.
Any storm threat to Gulf of Mexico production could drive additional support to the market as bulls await the next opportunity to pull the market higher.
Traders moved a three-day product in the day-ahead markets in mixed directions as changes in weather and load outlooks through and coming off of the weekend break provided both support and pressure.
Trading lower, Transco Zone 6 NY and Tetco-M3 trades were nearly 25 cents and 10 cents softer, to averages near $1.70 and $1.60, respectively.
On the opposite coast, SoCal Border traded nearly 10 cents lower to an index near $2.70, while PG&E Gate added more than 1 cent to an index near $3.30.
Meanwhile, Henry Hub traded nearly 5 cents higher to an index atop $2.90, Waha slipped nearly 5 cents to an index near $2.75 and Chicago added nearly 5 cents to an index atop $2.85.
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, natural gas index prices, as well as forwards and futures, visit our Commodities Pages.