Naturalgas futures surged past another major resistance point Friday, Oct. 7, despitethe recent report of a larger-than-expected injection into U.S. natural gasinventory.
Afterfalling to a $2.927/MMBtu low Thursdayin response to the reported net 80-Bcf injection for the week to Sept. 30,market bulls were emboldened as the contract settled higher in the week's finalsession.
Further,a lesser impact on power infrastructure from Hurricane Matthew on Friday pushedthe contract to a $3.218/MMBtu intraday and better-than-14-month high, beforeclosing the session with a gain of 14.4 cents at $3.193/MMBtu.
Naturalgas inventories builtto 3,680 Bcf with the most recent reported addition to total working gassupply, but storage overhangs to a year ago and the five-year average haveeroded significantly through an injection season that was marked by smallerbuilds against expectations and averages most weeks.
The80-Bcf injection was better than the market had expected, as demand for naturalgas for power generation eased despite lingering above-average temperaturesacross the bulk of the country.
TotalU.S. consumption of natural gas fell by 4% compared with the previous reportweek, driven by a 14% decline in power burn, the EIA reported in its latest "."
Naturalgas consumption was expected to take a further hit as the result of HurricaneMatthew, as its track up the U.S. East Coast was expected to knock out power tolarge numbers of consumers, as heavy winds and rain damaged powerinfrastructure.
Matthewfailed to deliver the anticipated punch, and while knocking out power to825,000 people in Florida as of about midday Friday, according to reports, thetwo largest counties in Florida — Broward County and Miami-Dade County — wentunscathed.
"HurricaneMatthew appears to be sparing Florida the massive disruptions to its electricalgrid that had been very likely," Boslego Risk Services' Robert Boslegosaid in an Oct. 7 note. "As a result, natural gas consumption at utilitieswill not be as severely impacted as expected. In the world of futures trading,which is based on market expectations, that is causing natural futures pricesto spike."
"Itis because the power outages are not as bad as expected, far fewer outages,"Price Futures Group analyst Phil Flynn said.
Matthewwas about 40 miles east-southeast of St. Augustine, Fla., and about 60 milessoutheast of Jacksonville Beach, Fla., at 2 p.m. ET, packing winds of 115 mphas it traveled north-northwest at 12 mph.
Aturn toward the north is expected tonight or Saturday, according to theNational Hurricane Center. On the forecast track, the center of Matthew willcontinue to move near or over the coast of northeast Florida and Georgiathrough late Friday, and near or over the coast of South Carolina on Saturday.
Whileit remains to be seen how much total damage Matthew inflicts on the U.S.southeast, thus far its lack of impact on power infrastructure and far fewercustomer outages are expected to support stronger natural gas consumption forpower burn in the coming week, particularly combined with temperature outlookscalling for above-average temperatures to blanket not only the Eastern U.S. butnearly the entire country, through late October.
Day-aheadmarkets were lower across the board as weather and weekend inclusion deflatedthe value of the three-day product moved in the week's closing session.
TranscoZone 6 NY shed more than 1 cent to an index below $1.00, Tetco-M3 traded about15 cents lower to an index near 75 cents and benchmark Henry Hub trades weredown about 2 cents on the day to an index near $2.95. At Waha, a near 5-centloss brought the index below $2.80 while Chicago trades were similarly lower toan average near $2.85. SoCal Border trades were about 10 cents lower andPG&E Gate traded about 5 cents lower to indexes averaged below $2.80 andnear $3.35, respectively.
Market prices andincluded industry data are current as of the time of publication and aresubject to change. 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.