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September natural gas consolidates ahead of storage data release

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September natural gas consolidates ahead of storage data release

NYMEX September natural gas futures were consolidating at midweek Wednesday, Aug. 2, ahead of the Thursday release of the latest storage data from the U.S. Energy Information Administration. Bargain hunting drove the upside as the contract spun off of a $2.785/MMBtu low to a $2.837/MMBtu high, but gains failed to hold and the contract settled 0.8 cent lower on the session at $2.811/MMBtu.

Participants are looking ahead to the 10:30 a.m. ET release on Thursday of the latest storage figures from the EIA, which are projected to show a build to stocks spanning 19 Bcf to 32 Bcf, while consensus calls for a build of 25 Bcf.

The injection will compare against a 3-Bcf withdrawal reported for the corresponding week in 2016 and the 44-Bcf five-year-average injection.

At consensus, the build would drive the total working gas supply to 3,015 Bcf after the modest 17-Bcf injection reported for the previous week drove the supply to 2,990 Bcf.

The overall improvement to the total working gas supply given a figure within the full range of expectations would limit the market's response to a bullish miss against the five-year average.

Weather forecasts that suggest larger storage injections in the weeks ahead could combine with a more bearish outcome from the storage data to drive sharper losses.

The latest six- to 10-day weather map from the National Weather Service shows mostly average and below-average temperatures across the eastern third of the country, mostly below-average temperatures in the central U.S. and a mix of average and above-average temperatures in the West.

SNL Image

Below-average temperatures dominate the map in the eight- to 14-day period, although portions of the East and West will also see some average and above-average temperatures.

SNL Image

Market participants are attempting to determine the impact of weather on weekly storage injections as they look ahead to the total amount of natural gas in storage at the end of the injection season.

The EIA expects an end-of-October supply at 3,940 Bcf, while the American Gas Association expects a slightly smaller total close to 3.8 Tcf.

Citing an increase in demand predominantly resulting from an expected 0.5 Bcf/d increase in power-sector consumption as a result of coal-to-gas due to the low price of natural gas, Morgan Stanley analysts expect an end-of-October natural gas inventory of about 3.80 Tcf, revised down from 3.85 Tcf and below what they see as market consensus near 3.75 Tcf.

Natural gas moved in day-ahead markets at predominantly higher prices amid demand outlooks boosted by weather.

Bucking the uptrend, Transco Zone 6 NY slipped nearly 15 cents to an index near $2.55, and Tetco-M3 gave back about 5 cents to an index below $2.00. Henry Hub trades were about 1 cent stronger to an index atop $2.75, Waha traded up nearly 5 cents to an index near $2.70 and Chicago gained about 5 cents to an index atop $2.75. SoCal Border trades were nearly 5 cents higher to an index near $3.10, while a gain of more than 5 cents drove the index at PG&E Gate to near $3.25.

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, natural gas index prices, as well as forwards and futures, visit our Commodities Pages.