Natural gas futures moved higher early Thursday as traders prepared to digest updated government inventory data for a week that took difficult-to-predict demand hits from former Hurricane Beryl and a holiday weekend.
August Nymex natural gas futures were trading up 4.5 cents to $2.080/MMBtu at 8:42 a.m. ET.
The August contract traded as low as $2.015 after Wednesday’s settlement, which was down 15.3 cents day/day. The front-month has traded lower over the past month, narrowing its usual premium to within a few cents of day-ahead Henry Hub cash prices.
The August contract’s move to within 1.5 cents of the $2 mark caused more pain for producers, analysts at Mobius Risk Group observed. However, the entire curve has also traded lower. “Consumers have an opportunity to de-risk net winter at levels which are within a few cents of the February lows,” the Mobius analysts said. In early trading Thursday, the Nymex November-March strip averaged $3.170, up modestly from the day before.
Expectations ahead of the U.S. Energy Information Administration’s (EIA) weekly natural gas storage report for the week ended July 12 spanned across a wider range than normal because of the hard-to-gauge impacts of Beryl and the long Fourth of July holiday weekend.
“This is a challenging build to predict,” NatGasWeather said. Another factor for the print was much lighter wind energy generation week/week, the forecaster said.
Injection estimates received by Reuters ranged from 12 Bcf to 48 Bcf, with a median of 28 Bcf. Responses to a Bloomberg survey extended from 12 Bcf to 32 Bcf, with a median of 27 Bcf.
NGI modeled an increase of 12 Bcf. That compares with a five-year average increase of 49 Bcf.
According to EBW Analytics Group’s Eli Rubin, senior analyst, the technically oversold front-month contract could rebound at any point, but “traders are reluctant to take risks amid a history of prolonged Freeport outages and milder weather forecasts.”
Freeport LNG Development LP’s terminal in Texas started to slowly ramp up this week following an outage caused by Beryl. Feed gas flows to the liquefied natural gas facility have picked up since Tuesday, as Freeport said it would first bring on one of its three trains in a phased restart.
The 2.1 Bcf/d LNG terminal was scheduled to receive about 473 MMcf of feed gas Thursday, according to Wood Mackenzie flow data.
Meanwhile, Lower 48 natural gas production was estimated down by 0.3 Bcf/d day/day to 101.0 Bcf/d on Thursday, the firm’s data show.
