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August natural gas gains as storage overhangs recede

Augustnatural gas futures finished the Thursday, July 21, trading session on thepositive side of the ledger with the contract price boosted following therelease of the U.S. Energy Information Administration storage report thatoffered another downside miss against outlooks and historical averages. Backingoff the post-report intraday high of $2.710/MMBtu, the front-month contractsettled the session 3.4 cents higher at $2.692/MMBtu.

covering the weekto July 15 outlined a modest 34-Bcf injection into natural gas inventoriesagainst a consensusestimate calling for a build of 37 Bcf, the 70-Bcf injection reported for thesame week in 2015 and the five-year average injection of 61 Bcf.

Thesmaller build triggered a move higher in August futures as it trimmed storageoverhangs to 471 Bcf above the year-ago level and 559 Bcf above the five-yearaverage storage level of 2,718 Bcf, even as it helped to drive the totalworking gas supply to 3,277 Bcf.

Marketparticipants are considering weather forecasts for the remainder of Julythrough August, weighing the near-term support from hot weather on demandagainst milder weather ahead that should trim cooling demand and support largerstorage injections before any major damage to the total working gas inventory.

Havingexited the heating season in March with 2,494 Bcf in inventories, even themodest storage builds through the injection season to date have put inventorieson track to reach a fresh end-of-October record of 4,022 Bcf, the EIA said. Theanticipation of the healthy supply is keeping pressure on values, limiting themarket's ability to drive the natural gas price higher.

Day-aheadtraders booked Friday product at mixed prices amid varied demand support drivenby weather and the approaching weekend.

Animpressive gain of more than 55 cents at Transco Zone 6 NY brought the index atthe major Northeast delivery hub to near $2.80 with the support of pipelineconstraints, while TETCO-M3 trades drifted more than 1 cent lower to an indexbelow $1.50. At the benchmark Henry Hub, trades were more than 1 cent lower toan index near $2.70, Waha trades were less than 1 cent lower to an index near$2.65 and Chicago added more than 1 cent to an index below $2.75. In the West,SoCal Border trades were nearly 10 cents higher to an index atop $2.90 whilePG&E Gate traded more than 2 cents higher to an index atop $3.00.

Market prices and includedindustry data are current as of the time of publication and are subject tochange. For more detailed market data, including our power,naturalgas and coalindex prices, as well as forwardsand futures,visit our Commodities Pages. To view detailed EIA Weekly Natural Gas Storagedata, go to our Natural GasStorage Page.