Afterending the prior session 1 cent lower at $2.727/MMBtu, August natural gasfutures were little changed overnight ahead of the Friday, July 15, open, asuncertainty driven by dueling fundamentals continue to plague the market.The contract was last 0.6 cent lower at $2.721/MMBtu in muted trade.
Theoverall health of natural gas stocks and an outlook for inventories to end theinjection season at a record-high level continue to weigh on the market, but storageoverhangs that have been shrinking steadily through the refill season as aresult of the prevalence of below-average builds to stocks and ongoingexpectations for weather-related demand support keep the upside attractive forfutures.
Inits latest storage data, the U.S. Energy Information Administration outlined a64-Bcf injection forthe week to July 8 that compared bearishly against the average 58-Bcf addition tostocks, but was bullish versus both the 95-Bcf build seen in the correspondingweek in 2015 and the 77-Bcf five-year average injection. Thereported build improved overall inventories to 3,243 Bcf, but trimmed overhangsto the year-ago level and five-year average to 507 Bcf and 586 Bcf,respectively.
Weatherforecasts from the National Weather Service that reflect above-averagetemperatures across nearly the entire country in the upcoming six- to 10-dayand eight- to 14-day periods suggest stronger demand in the coming weeks thatshould keep a lid on the amount of natural gas available to be moved tounderground storage facilities, thereby allowing for a continuation of thelackluster pace of inventory building that has dominated the refill season thusfar.
Yet,despite the slow pace of storage-building, inventories are seen to be on tracktoward a robust end-of-season level. "Even with lower-than-average storageinjections, EIA forecasts natural gas inventories to be 4,022 Bcf at the end ofOctober 2016, which would be the highest level on record for that time ofyear," the agency said in its latest "."
Incash action, the price of natural gas booked for Friday flow was tethered tothe downside in much of the country, as weather outlooks and the approachingweekend break fed anticipation of weakening demand.
Acrossthe major delivery locations, losses of around 2 cents on average tookbenchmark Henry Hub and Chicago day-ahead gas prices to indexes at $2.791/MMBtuand $2.729/MMBtu, respectively, as 1-cent decline drove PG&E Gate spot gaspricing to an index at $2.990/MMBtu. Running counter to the broad downtrend, anear 6-cent increase steered Transco Zone 6 NY hub activity to an index at$2.511/MMBtu.
Regionally,Gulf Coast cash gas price action shed about 3 cents on the session to averageat $2.651/MMBtu, as Midwest next-day gas pricing logged a near 5-cent decreasein transactions averaging at $2.640/MMBtu. West Coast spot gas prices slumpedby a little over 1 cent on average to an index at $2.543/MMBtu, while Northeastday-ahead gas price activity was almost unchanged on the day at $2.355/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 and natural gas indexprices, as well as forwards and futures, visitour Commodities Pages.