Editor's Note:
July natural gas futures moved into the lead position following the expiration of the June contract in previous session, holding predominantly to the negative side of the ledger as market participants look to near-term bearish fundamentals. The contract settled its debut session in the lead position with a 1.8-cent loss to $2.885/MMBtu.
The U.S. Energy Information Administration will release its next slate of inventory data for natural gas at 10:30 a.m. ET on Thursday, May 31, and the market anticipates a step up in the rate of storage building in the week to May 25 after a pullback in the rate of injections in the week to May 18.
After a 106-Bcf injection reported for the week to May 11, the EIA reported a 91-Bcf build to stocks for the week to May 18, as weather contributed to strong demand that limited the amount of natural gas available to stow away for future use.
For the upcoming storage report, market analysts and experts surveyed are calling for a storage injection from 97 Bcf to 105 Bcf, with a consensus pegged at a 100-Bcf build. Along with exhibiting an improvement to the 91-Bcf injection the previous week, a build at consensus would beat the 80-Bcf injection for the same week in 2017 as well as the 97-Bcf five-year average build.
The total working gas supply would climb to 1,729 Bcf, and deficits to the year ago and five-year averages would shrink to 784 Bcf and 496 Bcf, respectively.
Weather should ensure additional healthy storage injections going forward as average and below-average temperatures are forecast for key demand areas.
Updated National Weather Service projections show average to below-average temperatures stretching from a majority of the country's eastern third into the fringes of the west-central U.S., much of the Northwest and the northern tip of California in the six- to 10-day period before shrinking in scope in the West but overtaking more of the Midwest and lingering over the bulk of the eastern third in the eight- to 14-day period. Above-average temperatures settle elsewhere in the country.
Mild weather should promote a reduction in power sector consumption of natural gas as demand for cooling abates.
At the same time, natural as production levels are expected to rise with a steadily rising rig count. Baker Hughes' weekly U.S. gas and oil rig count data outlined an increase of 13 rigs in the week to May 25 to a total of 1,059.
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.
