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September gas futures slump in profit taking

After jumping by 10.2 cents in the prior session to settle at $2.985/MMBtu, NYMEX September natural gas futures pulled back overnight ahead of the Friday, Aug. 11, open, in profit taking on the heels of a four-day winning streak. At 7:00 a.m. ET, the contract was 0.3 cent lower at $2.982/MMBtu.

September gas has thus far notched an accumulated gain of 21.1 cents after steadily advancing for four straight sessions from Aug. 7 through Aug. 10, but a round of technical selling is beginning to encourage a renewed downdraft.

The recent uptrend in gas futures culminated in the prior session, following the release of the U.S. Energy Information Administration storage data detailing a 28-Bcf injection for the week ended Aug. 4 that bested the 24-Bcf year-ago build but trailed the average anticipated 36-Bcf addition and the 54-Bcf five-year-average build.

The reported injection took total working gas stocks to 3,038 Bcf, or 275 Bcf below the year-ago level and 61 Bcf above the five-year average of 2,977 Bcf.

The downside miss against consensus estimates and the five-year average drove support for futures, but the overall health of the natural gas inventories offered ongoing downside pressure.

Going forward, inventories could notch a larger injection in the subsequent storage report that will cover the week to Aug. 11, as a combination of softer demand attributed to milder summer weather and steady supply detailed in the EIA's latest "Natural Gas Weekly Update" for the week to Aug. 9 is likely to have left more natural gas unutilized and available to be moved into underground storage.

Mid-range temperature forecasts reflect a warming trend that could boost cooling demand anew, but weather-related demand support could be limited as peak summer weather is likely already in the rear-view mirror.

The National Weather Service sees above-average temperatures holding over much of the Northeast, a section of the Midwest, Oregon and a majority of the country's southern tier in the upcoming six- to 10-day period, before expanding to envelop the entire Northeast, upper parts of the Mid-Atlantic, most of the Midwest, the bulk of the West and portions of the South further out to the eight- to 14-day period.

Average to below-average temperatures span the midsection of the East, a large area of the central U.S. and the remainder of the West in the shorter-range view, but shrink in scope in the longer-range period to be contained to a portion of the Northwest, a few parts of the central U.S. and a smaller area of the East.

Despite imminent heat across major demand centers, end-of-season storage estimates remain robust. The EIA sees working gas stocks ending the injection season at the close of October atop 3,900 Bcf.

In cash trading, natural gas moved Thursday for Friday flow predominantly notched gains, in tandem with futures.

Among the key hubs, the charge higher was led by Transco Zone 6 NY next-day gas pricing that added roughly 16 cents on the session to average at $2.000/MMBtu. Chicago spot gas price activity followed with a near 4-cent uptick in deals averaging at $2.814/MMBtu, then PG&E Gate hub action that rose by about 3 cents to an index at $3.275/MMBtu and benchmark Henry Hub cash gas prices that advanced by around 1 cent on average to an index at $2.905/MMBtu.

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In regional terms, Northeast day-ahead gas price action logged an almost 7-cent increase in trades averaging at $2.161/MMBtu, while Midwest next-day gas prices were bolstered by roughly 5 cents on average to an index at $2.717/MMBtu. West Coast cash gas pricing climbed by about 10 cents to an index at $2.571/MMBtu, as Gulf Coast spot gas price activity tacked on near 3 cents to average at $2.799/MMBtu.

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Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power and natural gas index prices, as well as forwards and futures, visit our Commodities Pages.