With supply appearing more than ample to meet demand through the waning days of summer, natural gas futures gave up more ground through midday trading Tuesday. Natural gas spot prices also fell.
Here’s the latest:
- September Nymex natural gas contract trading down 5.6 cents to $1.900/MMBtu as of 2:20 p.m. ET
- Production near 102 Bcf/d, in line with the 30-day average and close to summer highs, Wood Mackenzie data show
Analysts note that, while output proved solid this month, producers have warned they could cut back this fall depending on weather-driven demand and prices.
At the same time, the weather outlook presents uncertainties. While hot across the country this week, the National Weather Service (NWS) forecast a cool start to September. NWS data point to above-average temperatures for the balance of next month – though that could pit comfortable conditions across the North against enduring Southern heat, leaving markets dubious about national demand overall.
- U.S. LNG export terminals scheduled to receive more than 12 Bcf of feed gas Tuesday, on par with the 30-day average, per Wood Mackenzie
- Market looks to potentially bullish U.S. Energy Information Administration (EIA) storage print
Liquefied natural gas export activity is holding strong near August highs, while analysts are anticipating a relatively light storage report this week.
Looking ahead to Thursday's EIA inventory data, covering the week ended Aug. 23, NGI modeled a build of 34 Bcf. That compares with a five-year average increase of 43 Bcf. Preliminary polling by Reuters found an average increase of 36 Bcf.
[Overcoming obstacles in the LNG market: NGI sits down with Baker Botts' Jason Bennett, department chair of global projects, to discuss U.S. LNG projects and the hurdles they currently face. Despite those obstacles cropping up, global demand for LNG is going nowhere, and the U.S. remains a prime supplier. Find out more from NGI’s Hub & Flow podcast.]
EIA reported a 35 Bcf injection for the week ended Aug. 16. It increased inventories to 3,299 Bcf and kept stocks 13% above the five-year average. It eclipsed the mid-20s Bcf build projected by major polls and put downward pressure on futures that carried into this week.
- Cash prices at Henry Hub averaging $1.910, down 2.0 cents, according to NGI’s MidDay Price Alert
- NGI’s Spot Gas National Avg. off 2.0 cents to $1.475.
Near-term heat bolstered natural gas cash prices at the national level to start the week, but the looming cooldown and strong supply sapped momentum Tuesday.
Tudor, Pickering, Holt & Co. analyst Matt Portillo said that, with a varied weather outlook and the potential for lower production, “the next few weeks should be interesting” on the supply/demand and storage report fronts.
