Natural gas futures reversed early steeper losses but held the downside following the latest storage data, which outlined a largely expected injection for the week ended Aug. 23.
In its debut as the lead contract, October Nymex natural gas futures were down 4.0 cents to $2.057/MMBtu ahead of the 10:30 a.m. ET government report. The freshly anointed prompt month contract pared losses as the data hit the screen to $2.077. By 11 a.m. ET it was trading down 1.5 cents at $2.082.
The U.S. Energy Information Administration (EIA) data showed a 35 Bcf build to storage facilities across the Lower 48. The injection was within the wide range of estimates ahead of the print.
A Reuters survey found injections spanning 28 Bcf to 55 Bcf, with a median increase of 38 Bcf. A Bloomberg survey outlined builds of 31 Bcf to 43 Bcf, with consensus at 35 Bcf. NGI modeled a build of 34 Bcf.
The injection compared with a build of 28 Bcf during the same week a year ago and a five-year average increase of 43 Bcf. The total working gas supply climbed to 3,334 Bcf, dropping the surplus to 361 Bcf, or 12.1% above the five-year average.
It was cooler than normal over much of the eastern half of the United States during the review period, although impressively hot over Texas, NatGasWeather said. There were 77 cooling degree days (CDD) during the reporting week, which was lower than the 30-year normal of 83 CDDs for the period, data from financial firm LSEG showed.
By region, the Midwest and East led the way higher, as stocks were up 21 Bcf and 19 Bcf, respectively, according to EIA. Mountain region stocks were up 3 Bcf.
Conversely, in the closely watched South Central region, regional supply was 6 Bcf lower week/week. Stocks were down 8 Bcf in salt and up 2 Bcf in nonsalt facilities. Pacific region stocks were 1 Bcf lower.
The build followed a larger-than-expected 35 Bcf injection for the week ended Aug. 16, which increased inventories to 3,299 Bcf and kept stocks 13% above the five-year average.
Natural gas production was higher during the week, averaging at 102.1 Bcf/d to meet strong cooling demand, according to Wood Mackenzie data.
“The latest EIA monthly production data showed that August was at the highest level since February at 103.6 Bcf/d,” R.J. O’Brien & Associates senior analyst Tom Pawlicki told NGI. The higher production came despite indications from producers, including the nation’s No. 1 gas producer, EQT Corp., that curtailments underway would continue through the fall.
With temperatures expected to moderate, data Thursday showed a decline of nearly 1.87 Bcf/d in production after a 1.23 Bcf/d upward revision Wednesday, said Wood Mackenzie analyst Emma Weng. Losses were concentrated in West Virginia, Pennsylvania and in the New Mexico portion of the Permian Basin.
Looking Ahead
National demand was forecast to remain strong through the weekend, with “very warm to hot” highs expected from the mid-80s to 100s across most of the country, NatGasWeather said. The firm noted Texas could cool a few more degrees to the mid-80s to low 90s. Electric Reliability Council of Texas demand could potentially “soften considerably versus the prior week.”
National demand was expected to ease to only moderate levels next week because highs into the 90s were likely to decrease in the South. Highs in the upper 60s to lower 80s were forecast across the Midwest and East.
Early gas storage estimates for the week ending Aug. 30 ranged from injections of 22 Bcf to 49 Bcf, with an average increase of 34 Bcf. That would compare with an increase of 33 Bcf during the same week last year and a five-year average increase of 51 Bcf.
