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August natural gas ends slightly negative amid tighter supply/demand balance

Augustnatural gas futures ended a volatile, Thursday, July 14, trading session with amodest loss, neither convinced to move sharply higher nor hold the downsidefollowing an inventory report that outlined an injection that was an upsidemiss against expectations, but well below historical averages. Thefront-month contract settled the session 1.0 cent lower at $2.727/MMBtu afterfluctuating between gains and losses throughout the session.

Justahead of the 10:30 a.m. ET release of storage data that outlined a into naturalgas inventories for the week to July 8, the August natural gas futures contractwas trading modestly higher at $2.742/MMBtu. The market was slow to respond tothe build that was a bearish comparison against the formed at a 58-Bcfinjection, initially holding the upside but then extending the downside to$2.709/MMBtu, before once again returning to the plus side of the ledger at theclose.

The64-Bcf injection reported by the U.S. Energy Information Administration wasbelow both the 95-Bcf injection reported for the same week in 2015 and thefive-year average injection of 77 Bcf, providing the market some upside supportas the injection pushed the total working gas supply to 3,243 Bcf, whileshrinking storage surpluses to 507 Bcf above the year-ago level and 586 Bcfabove the five-year average storage level of 2,657 Bcf.

Weatheralso continues to feed market gains, as outlooks for the six- to 10-day andeight- to 14-day periods show the bulk of the country engulfed by above-averagetemperatures, with heat in the heavy consuming east and central U.S. marketsstoking expectations for strong demand from the electric generating sector.

Gains,however, are being tempered by the total working gas supply and an outlook fromthe EIA for an end of injection season natural gas inventory at a fresh Octoberrecord of 4,022 Bcf, even with overhangs that have been shrinking steadilythrough the injection season, as weekly builds have consistently underperformedagainst historical averages.

Losseswere prevalent in the day-ahead markets as traders booked a product for Fridayflow that found pressure from lower load projections by regional grid operatorsresponding to weather forecasts and load erosion heading into the weekend break.

Runningcounter to the downside trend, Transco Zone 6 NY trades were about 30 centshigher on the session to an index around $2.60 with support from pipelineconstraints. Tetco-M3 traded nearly 5 cents lower to an index nearing $1.35,while a similar loss at the Henry Hub brought the average there to near $2.75.Waha trades followed the Henry Hub with a near 5-cent loss to an index around$2.65 and Chicago shed about 5 cents to an index around $2.70. In the West,modest losses near 1 cent were reported at both the SoCal Border and PG&EGate, where indexes were marked below $2.75 and below $3.00, respectively.

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 Gas StoragePage.