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August gas futures extend lower ahead of storage data release

Aftershedding 7 cents in the prior session at a settle at $2.658/MMBtu, Augustnatural gas futures remained tethered to the downside overnight ahead of theThursday, July 21, open, as the market looks beyond the possibility foradditional underperforming storage builds when the next weekly inventory datais released at midmorning and further into the midrange amid warmer weatherforecasts toward prospects for record-high end-of-season stocks.The contract was last eyed down 0.8 cent at $2.650/MMBtu

The nextweekly storage report due out from the U.S. Energy Information Administrationat 10:30 a.m. ET on Thursday is poised to extend the streak of below-averageinjections to stocks that have dominated the refill season thus far, as weatherduring the review week is seen to have bolstered cooling demand.

for the forthcominginventory data that will cover the week to July 15 call for a storage build ofanywhere from 33 Bcf to 39 Bcf, with consensus formed at a 37-Bcf addition tostocks. This would compare against the 61-Bcf five-year-average build and the70-Bcf injection in the same week in 2015.

Degreeday data from the National Oceanic and Atmospheric Administration for the weekto July 16 outline 12.2% more cooling degree days compared to the same weeklast year and 13.7% more than normal.

Theweek's data will follow the 64-Bcf injection during the week to July 8 that tookoverall inventories to 3,243 Bcf. Comparing against the 95-Bcf build in theprevious year and the 77-Bcf five-year average injection, the reported additionto stocks trimmed surpluses to the year-ago level and five-year average to 507Bcf and 586 Bcf, respectively.

Astorage build at this week's consensus figure would bring total stocks to 3,280Bcf, further shrinking the year-on-year overhang to 474 Bcf and tightening theyear-on-five-year-average surplus to 562 Bcf.

UpdatedNational Weather Service forecasts for the six- to 10-day and eight- to 14-dayperiods that reflect above-average temperatures across the country, save forthe west-north-central U.S., suggest ongoing demand support in the weeks aheadthat should continue keeping a lid on the amount of natural gas available tomove into underground storage facilities.

Heatin store is expected to generate robust cooling load that would divert naturalgas away from storage facilities and toward the power-generating sector wheremore fuel will be needed to meet air-conditioning demand.

Yet,despite the ongoing lackluster pace of storage-building, preliminary estimatesfor end-of-season inventories remain hefty. The EIA expects inventory levels toreach a record-high 4,022 Bcf at the end of October, even withsmaller-than-average injections to storage, according to the agency's latest"Short-Term EnergyOutlook."

Incash activity, natural gas values for next-day delivery faltered in much of thecountry Wednesday, in line with futures.

Acrossthe major delivery locations, a better-than-7-cent decline was seen drivingbenchmark Henry Hub spot gas pricing to an index at $2.756/MMBtu, as losses ofbetween 4 cents and 5 cents on average took Chicago and PG&E Gate day-aheadgas prices to indexes at $2.726/MMBtu and $3.000/MMBtu, respectively. Runningagainst the broad downtrend, a 23-cent gain steered Transco Zone 6 NY hubaction to an index at $2.180/MMBtu.

On aregional basis, Gulf Coast and Midwest cash gas prices retreated by about 8cents on average to indexes at $2.626/MMBtu and $2.625/MMBtu, respectively.West Coast next-day gas pricing slumped by a little over 5 cents to an index at$2.550/MMBtu, as Northeast spot gas price activity defied the wider decline byadding roughly 1 cent to average at $2.225/MMBtu.

Market prices and included industry data are currentas of the time of publication and are subject to change. For more detailedmarket data, including power andnatural gasindex prices, as well as forwards and futures, visitour Commodities Pages.