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August gas revisits upside on supportive weather, shrinking stock overhangs

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August gas revisits upside on supportive weather, shrinking stock overhangs

Aftershedding 9.9 cents in the week's opening session to a settle at $2.702/MMBtu,August natural gas futures renewed gains overnight ahead of the Tuesday, July12, open, as market focus reverted from still-robust inventories to ongoingweather support and a steady erosion of storage surpluses that implied atightening of the supply/demand balance. The contract was last seen 4.9 centshigher at $2.751/MMBtu.

UpdatedNational Weather Service projections for the six- to 10-day and eight- to 14-dayperiods that show above-average temperatures enveloping the bulk of the countryand leaving only portions of the West in the scope of average to below-averagetemperatures continue to spell stronger cooling demand in the weeks ahead thatshould divert natural gas from storage facilities to the power-generatingsector where more fuel will be needed to meet air-conditioning load.

Increaseddemand would limit the amount of natural gas available to be moved intounderground storage facilities, allowing for a continuation of the slow pace ofinventory-building that has dominated the injection season thus far.

Althoughworking gas stocks continue building weekly, injections thus far in the refillseason that have largely compared well below historical averages have erodedstorage overhangs.

Inits latest storage data, the U.S. Energy Information Administration outlined a39-Bcf build for theweek to July 1 that compared against an 83-Bcf injection in the correspondingweek last year and the 77-Bcf five-year-average addition to stocks. It tookoverall inventories to 3,179 Bcf, trimming the year-on-year overhang to 538 Bcfand shrinking the year-on-five-year-average surplus to 599 Bcf.

Earlyforecasts for the next weekly inventory report that will cover the week to July8 suggest an injection of about 60 Bcf that, while well above the prior-weekdata, would still compare below the 77-Bcf five-year-average build and the95-Bcf injection reported in the same week in 2015.

Incash action, natural gas prices for day-ahead flow opened the fresh workweekMonday predominantly biased to the upside on the back of supportive weather anddemand projections.

Acrossthe key hubs, a better-than-30-cent uptick drove Transco Zone 6 NY next-day gasprice activity to an index at $1.974/MMBtu, as a near 25-cent advance steeredPG&E Gate spot gas pricing to an average at $2.939/MMBtu. Gains of almost12 cents took Chicago day-ahead gas price action to an index at $2.777/MMBtu,as an increase of a little more than 8 cents brought benchmark Henry Hub cashgas pricing to an average at $2.878/MMBtu.

Regionally,Northeast day-ahead gas prices rose by about 28 cents on average to an index at$2.274/MMBtu, as West Coast cash gas price action tacked on 20 cents on thesession to average at $2.588/MMBtu. Midwest spot gas pricing was lifted byroughly 9 cents to an index at $2.680/MMBtu, as Gulf Coast next-day gas priceactivity notched a near 6-cent increase in deals averaging at $2.705/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.