Natural Gas Futures Propelled by Bullish Storage Print, Lingering Heat — MidDay Market Snapshot

By Jodi Shafto

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Published in: MidDay Price Alert Filed under:

Prompt month natural gas futures traded solidly higher Thursday, reaching an intraday high of $2.286/MMBtu enlivened by a storage print that fed bullish sentiment, coming in below estimates and well below historical averages.

NGI's midday Waha natural gas price chart

Here's the latest:

  • October Nymex futures up 10.9 cents to $2.254 as of 2:35 p.m. ET
  • U.S. Energy Information Administration (EIA) posts 13 Bcf build

Market participants pounced on the bullish implications from the modest storage build for the week ended Aug. 30. The injection was well below the 51 Bcf five-year average increase. The build was smaller than NGI's modeled 20 Bcf injection, a Reuters survey median estimate of a 28 Bcf gain and the 27 Bcf median build from Bloomberg's poll.

With the injection, gas inventories rose to 3,347 Bcf, keeping stocks above the year-earlier level of 3,139 Bcf and the five-year average of 3,024 Bcf.

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This storage data was "bullish by any objective measure, with the weekly build lagging historical benchmarks and market expectations by a considerable clip," Pinebrook Energy Advisors' managing partner Andy Huenefeld said. "The market responded accordingly," he added, as the prompt month contract jumped higher immediately following the EIA release and continued to push to new highs near the top of the recent range and just below demonstrated technical resistance surrounding $2.30.

The 13 Bcf injection was "incredibly bullish and certainly should have bears concerned," Snapper Creek Energy analyst Kyle Cooper told NGI. "However, temps are moderating and demand will be falling." Moreover, tropical storm possibilities were continuing as the Atlantic hurricane season kicked into high gear. Hurricanes "are now bearish, so a big quandary," Cooper said.

  • Cooler weather expected, while tropics get busy with five systems churning

National demand was moderate during the current week because numerous weather systems led to much less coverage of highs into the 90s, NatGasWeather meteorologist Rhett Milne said on the online energy platform Enelyst.

Moderate demand was forecast into early next week as cool weather systems in the Midwest and East could bring highs of 50s to 70s. Milne said that lows in the 40s could result in a few early season heating degree days. Meanwhile, the West would remain "very warm to hot," with highs in the 90s to 110s. However, the forecast favored a "very warm to hot ridge" building over vast stretches of the country for the six- to 15-day period. That could result in highs of mid-80s to 100s over the southern half of the United States, while "perfect" 70s to 80s are expected in the North.

Milne also pointed to the tropics, where there were five "systems of interest." He noted the system tracking toward the Southern Gulf of Mexico was of the greatest interest in the near term. "As of now, it has the potential to bring heavy showers to far South Texas but has yet to show it will be anything more ominous than that," Milne said.

Aided by the lingering heat, analysts generally expected a seasonal light increase in the next EIA report, covering the first week of September. Early injection estimates submitted to Reuters for the reporting period ending Sept. 6 averaged 49 Bcf. That compared to a five-year average build of 67 Bcf.

Moreover, natural gas production continued to hold around 101 Bcf/d. Thursday's estimated output of 101.0 Bcf/d was near the 101.7 Bcf/d seven-day average estimate, according to Wood Mackenzie, suggesting ongoing producer restraint.

Volatility continued at the Waha hub, where physical gas prices spanned negative 25.0 cents to $1.350 on Thursday. Prices were higher at hubs across the Permian Basin against a wider downtrend.

Soaring Permian physical prices come as the 2.5 Bcf/d Matterhorn Express Pipeline out of the Permian may be initiating operations, EBW Analytics Group senior analyst Eli Rubin said. "Speculation that the Matterhorn pipeline may be beginning to take gas could be a precursor to a wave of supplies reaching the Gulf Coast in coming weeks."

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Jodi Shafto

Jodi Shafto joined NGI as a Senior Natural Gas Reporter in October 2023. Before that, she was a business news reporter for South Carolina's largest daily newspaper, The Post and Courier, and was a Senior Energy Markets Reporter at S&P Global Market Intelligence. Based out of Charleston, Jodi has covered US energy markets since 2005 as a reporter, editor and analyst. A New Jersey native, she holds a BS in Journalism from Bowling Green State University.