July natural gas futures failed to add to prior-day gains, reversing instead in the Wednesday, June 7, session ahead of the next slate of inventory data from the U.S. Energy Information Administration that is expected to show an impressive injection.
The contract climbed to a $3.095/MMBtu high early, but reversed gains to reach a $3.013/MMBtu low and a settle down 2.2 cents on the session at $3.020/MMBtu.
Traders were positioning ahead of the next inventory report from the EIA due out at 10:30 a.m. ET on Thursday, with an anticipated build to stocks spanning 93 Bcf to 101 Bcf and a consensus formed at a 98-Bcf build for the week to June 2. The figure will follow an 81-Bcf build to stocks for the week to May 26 that brought the total working gas supply to 2,525 Bcf, some 370 Bcf below the year-ago level and 225 Bcf above the five-year average storage level of 2,300 Bcf.
A build at this week's consensus estimate would bring the total working gas supply to 2,623 Bcf, and with comparisons to the 94-Bcf five-year-average injection and the 68-Bcf build for the same week in 2016, would shrink the year-on-year deficit to 340 Bcf while widening the year-on-five-year-average surplus to 229 Bcf.
The ramp up in the rate of storage building implies a healthy end-of-October inventory, with the expectations keeping downside pressure on the markets.
Weather changes, however, offer some counter as warm weather forecast for the six- to 10-day and eight- to 14-day periods imply an increase in cooling demand that could limit the amount of natural gas available to be squirreled away for the peak winter heating season.
The latest National Weather Service maps show above-average temperatures blanketing nearly the entire eastern two-thirds of the country in the six- to 10-day period, while the eight- to 14-day map shows less intense heat across the eastern third of the U.S., a mix of above-average and average temperatures in the central U.S. and varied weather in the West from below-average and average temperatures in the north to above-average temperatures across the south.
Trading in the day-ahead markets was done in mixed directions amid varied demand projections for Thursday.
Transco Zone 6 NY shed nearly 10 cents to an index near $2.20, while Tetco-M3 ticked nearly 5 cents higher to an index atop $2.05. At the Henry Hub, trades were about 5 cents higher to an average just below $3.00, while Waha slipped more than 5 cents to an index near $2.75 and Chicago inched up about 1 cent to an index atop $2.85. At the SoCal Border, deals were about 1 cent higher to an index atop $2.80, while PG&E Gate traded about 1 cent lower to an index near $3.15.
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