NYMEX November natural gas futures settled at $3.017/MMBtu, down 4.4 cents, as a lackluster market put pressure on the contract despite a lower-than-expected storage build from the US Energy Information Administration.
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EIA figures showed a 58-Bcf build to gas storage stocks for the week that ended Friday to reach 3.466 Tcf. The build was below the consensus of an S&P Global Platts survey of analysts indicating a 66 Bcf injection.
"Those numbers look like they are on the bullish end of things and the market initially popped in reaction," said Phil Flynn, senior market analyst for Price Futures Group, "but it's looking like October is not going to be the shoulder month we expected.
"We're not seeing the demand and the market is not getting a boost from these numbers. The market is lackluster," he said.
After the EIA report was released, the November contract initially ticked up about 1 cent to about $3.07/MMBtu before going into decline.
On the whole, Flynn said the storage figures were not too promising.
Storage stocks for the corresponding week a year ago totaled 3.593 Tcf, so 2017 is lagging 3.5% behind 2016. The five-year average for the same period stands at 3.425 Tcf, putting 2017 at 1.2% above that pace.
"In the big picture, the cushion over the five-year average has to be a concern," Flynn said. "That cushion we normally have has dissipated, so there is strength at the back end of the curve at the end of winter."
While the November contract settled at $3.017/MMBtu, December closed at $3.184/MMBtu and January hit $3.298/MMBtu. "The market is on guard for higher prices," Flynn said.
US power burn fell sharply Thursday to 30.5 Bcf/d, down 3.4 Bcf/d. The decline is expected to continue, according to Platts Analytics' Bentek Energy, with power burn expected to average 25.1 Bcf/d through October 4.
Power burn has been down in general, with the month-to-date average at 30 Bcf/d, down 900 MMcf/d, and the year-to-date average off 2.9 Bcf/d at 25.8 Bcf/d.
But the weather outlook is bullish, with higher-than-normal temperatures expected in the eight- to 14-day window for demand areas in the Northeast, Midwest and Southeast.
The NYMEX settlement price is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).
--John DeLapp, firstname.lastname@example.org
--Edited by Valarie Jackson, email@example.com