Following a 14.7-cent decline in the week's opening session to settle at $2.794/MMBtu, NYMEX September natural gas futures notched gains overnight ahead of the Tuesday, Aug. 1, open in buying at lows with little in the way of fundamental support. At 8:05 a.m. ET, the contract was 1.4 cents higher at $2.808/MMBtu.
Milder to cooler weather forecast for major demand centers in the midrange continue to spell weaker demand for cooling that should leave more natural gas unutilized and available to be moved into underground storage facilities.
In its latest outlooks, the National Weather Service sees below-average temperatures enveloping much of the Rockies and nearly the entire eastern two-thirds of the country in the upcoming six- to 10-day period, before receding from the Eastern Seaboard and some locations in the country's upper tier but remaining dominant over the central U.S. and the Rockies further out to the eight- to 14-day period. Average temperatures called for narrow bands in the Southeast, Texas and Rockies in the shorter-range view overtake a majority of the Eastern Seaboard and a few areas in the Midwest in the longer-range view.
Only portions of the West, the southern tip of Texas and the fringes of the Southeast are expected to see above-average temperatures throughout both periods.
Weather as forecast should allow efforts to rebuild natural gas inventories to improve from a relatively lackluster pace seen thus far in the injection season.
A slower-than-normal rate of weekly inventory builds for most of the refill season continued into the latest storage report for the week ended July 21, for which the U.S. Energy Information Administration outlined a 17-Bcf injection that was below the full range of estimates coming into the day, as well as both the 47-Bcf five-year average injection and a 20-Bcf addition in the same week in 2016. It took total working gas stocks to 2,990 Bcf, or 302 Bcf below the year-ago level and 111 Bcf above the five-year average of 2,879 Bcf.
Net storage builds thus far in the traditional refill season have reached only 939 Bcf, versus the five-year average of 1,093 Bcf over the same period. "Smaller-than-average net injections to date during the 2017 injection season are the result of high electric sector demand, which was coupled with warmer-than-normal temperatures on average; relatively high levels of natural gas exports; and storage levels that were already above average at the start of the refill season," the EIA said in its latest "Natural Gas Weekly Update."
Absent supportive weather-related demand ahead, weekly additions to storage should encourage overall inventories to build to a robust end-of-season level near 4.0 Tcf.
In cash trading, varied weather-related demand prospects drove choppy price activity for natural gas booked Monday for Tuesday flow.
Looking at the key hubs, an almost 94-cent increase drove Transco Zone 6 NY day-ahead gas pricing to an index at $2.686/MMBtu, as a near 2-cent uptick nudged Chicago spot gas price action to an average at $2.795/MMBtu. Conversely, a roughly 10-cent decline steered benchmark Henry Hub cash gas price activity to an index at $2.865/MMBtu, as an almost 3-cent reduction took PG&E Gate hub pricing to an average at $3.250/MMBtu.
Regionally, Northeast next-day gas price activity logged a roughly 39-cent gain in deals averaging at $2.446/MMBtu, as Midwest cash gas prices deflated by about 6 cents on average to an index at $2.652/MMBtu. Gulf Coast spot gas pricing was off near 9 cents day on day at an index at $2.737/MMBtu, while West Coast day-ahead gas price action was up almost 4 cents at an average at $2.563/MMBtu.
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