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August natural gas finds support heading into weekend

Augustnatural gas futures spent another session seesawing between gains and losses sinkingto a $2.669/MMBtu low and rising to a $2.778/MMBtu high, and it settled on the plusside of the ledger as the healthy total working gas inventory lost to strong weather-drivendemand and shrinking storage surpluses in the week's final trading session. Thecontract settled Friday, July 15, 2.9 cents higher at $2.756/MMBtu.

The front-monthcontract favored the downside in the prior-session following the release of storagedata that outlined a 64-Bcf injectioninto natural gas inventories for the week to July 8, as the injection was abovemarket consensus expectations and improved the total working gas supply to 3,243Bcf, on track to reach an end-of-October fresh record high inventory of 4,022 Bcf,according to forecasts from the U.S. Energy Information Administration.

The build,however, also continued the underperformance of weekly natural gas storage injectionsagainst historical average injections including the 95-Bcf injection reported forthe same week in 2015 and the five-year average injection of 77 Bcf, which cut storagesurpluses to 507 Bcf above the year-ago level and 586 Bcf above the five-year averagestorage level of 2,657 Bcf.

Further,participants looking ahead to the next storage report from the EIA that will coverthe current week to July 15 see a return to much smaller injections. Early outlookssuggest injections from 28 Bcf to 42 Bcf, compared against the 61-Bcf five-year-averageinjection and the 70-Bcf build reported for the same week in 2015.

Weatherremains a bullish market indicator as outlooks for the six- to 10-day and eight-to 14-day periods show the bulk of the country engulfed by above-average temperatures,with heat in the heavy consuming east and central U.S. markets stoking expectationsfor strong demand from the electric generating sector.

Tradersmoved a three-day product in the day-ahead market to accommodate for the weekend,with the low demand weekend day included in the package helping to weigh valueslower at most major delivery hubs.

TranscoZone 6 NY trades were down more than 80 cents as the market corrected from prior-daygains supported by demand and pipeline constraints. The index at the key Northeastlocation was pegged below $1.80. Tetco-M3 trades were 5 cents lower to an indexnear $1.40. At the Henry Hub, trading averaged near $2.65 for a loss of about 10cents on the session, while the market at Waha slumped about 5 cents to an indexbelow $2.60, and the market at Chicago softened about 10 cents to an index near$2.60. In the West, SoCal Border traded nearly 20 cents down to an index below $2.55,and PG&E Gate traded more than 10 cents lower to an index near $2.85.

Market prices and included industrydata are current as of the time of publication and are subject to change. For moredetailed 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 Storage data,go to our NaturalGas Storage Page.