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July gas climbs as weather support returns

After shedding another 0.9 cent to settle at $2.999/MMBtu ahead of the weekend, NYMEX July natural gas futures posted gains in overnight trading leading up to the Monday, June 5, open, in technical buying and with renewed weather support. At 6:28 a.m. ET (1028 GMT), the contract was 3.1 cents higher at $3.030/MMBtu.

July gas logged a cumulative loss of 31.1 cents in a four-day losing streak from May 30 through June 2, but sentiment of oversold conditions pervade the market and inspire renewed buying backed by fresh fundamental support as revisions to temperatures outlooks show bullish weather-related demand prospects.

The latest National Weather Service projections for the six- to 10-day and eight- to 14-day periods show above-average temperatures enveloping nearly the entire eastern two-thirds of the country and portions of the West, limiting the scope of average and below-average temperatures to small patches of the central U.S. and a majority of the West.

Should the projected weather conditions materialize, cooling demand could climb and limit the amount of natural gas available to be moved into underground storage facilities, thereby allowing for a slowdown in the rate of weekly injections in the weeks ahead.

Natural gas inventories logged a net 81-Bcf build during the most recent storage review week ended May 26, coming in above market expectations but mixed against historical averages. The reported addition to stocks bested the full range of estimates coming into the day and the 80-Bcf build seen in the corresponding week in 2016, but was a downside miss against the 97-Bcf five-year average injection.

The storage data included a reclassification of 4 Bcf from working gas to base gas in the Mountain region, resulting in an implied flow of 85 Bcf for the week in review. Total working gas stocks currently sit at 2,525 Bcf, or 370 Bcf below the year-ago level and 225 Bcf above the five-year average of 2,300 Bcf.

At the cash hubs, the price of natural gas booked June 2 for Saturday-through-Monday flow was predominantly weaker, as the anticipation of softer demand fueled by the weekend inclusion in the revised offering and milder weather conspired with ongoing losses at the futures complex.

Across the major delivery locations, the charge lower was led by Transco Zone 6 NY spot gas price action that tumbled by 65 cents to an index at $1.850/MMBtu. Benchmark Henry Hub next-day gas pricing followed with a near 12-cent reduction in deals averaging at $2.849/MMBtu, then PG&E Gate cash gas prices that fell by about 10 cents on average to an index at $2.991/MMBtu and Chicago hub activity that shed almost 3 cents on the session to average at $2.688/MMBtu.

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In regional terms, Northeast day-ahead gas pricing notched a roughly 33-cent decrease in transactions averaging at $2.126/MMBtu, as Gulf Coast and West Coast cash gas prices deflated by almost 7 cents on average to indexes at $2.770/MMBtu and $2.381/MMBtu, respectively. Midwest next-day gas price action eased by about 1 cent to an index at $2.642/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.