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July natural gas losing streak ends in technical buying

July natural gas futures turned higher Tuesday, June 6, as a five-day losing streak came to an end amid technical buying at lows with some modest fundamental support behind the climb. The contract settled 6.0 cents higher at $3.042/MMBtu, while spanning a range from $2.972/MMBtu to $3.059/MMBtu throughout the session.

Natural gas inventories sitting at 2,525 Bcf, after an 81-Bcf injection reported for the week to May 26, are 370 Bcf below the year-ago level but 225 Bcf above the five-year average of 2,300 Bcf, and are anchoring the market to the downside, allowing July futures to tumble to a fresh low in June 6 trade.

The natural gas inventory is expected to show a healthy stride higher when the EIA releases its next report at 10:30 a.m. ET on June 8, as demand during the review week to June 2 is expected to have been limited by weather and the Memorial Day holiday weekend, allowing for a near 100 Bcf injection, according to forecasts.

Weather outlooks, however, were driving the upside, as the latest National Weather Service maps show above-average temperatures blanketing nearly the entire eastern two thirds of the country through both the six- to 10-day and eight- to 14-day periods. Above-average temperatures could boost cooling demand and wrestle the call for natural gas to fuel power generators higher, as utilities work to meet customer load.

SNL Image

SNL Image

An increase in demand for natural gas from the power generating sector could drive down the amount of natural gas available to divert to storage facilities, equating to a slower rate of storage building and upside support for natural gas values.

Day-ahead trade was done mostly to the upside as the market responded to stronger demand outlooks and the rising price of natural gas futures.

Transco Zone 6 NY trades were nearly 20 cents higher to an index near $2.30, while Tetco-M3 traded nearly 5 cents higher to an index near $2.05. At the Henry Hub, a near 5-cent gain brought the index to about $2.95, while Waha gained more than 10 cents and Chicago added more than 1 cent to averages atop $2.80 and $2.85, respectively. In the West, SoCal Border trades were higher by more than 5 cents, and PG&E Gate added nearly 10 cents to averages near $2.80 and $3.20, respectively.

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.