Natural gas futures traded lower early Thursday as traders awaited updated government inventory data and whether the third largest U.S. LNG terminal was close to restarting.
The August Nymex contract was down 3.4 cents at $2.295/MMBtu at 8:48 a.m. ET.
Feed gas flows to U.S. liquefied natural gas export terminals were set to rise by 0.6 Bcf/d to around 11.6 Bcf/d on Thursday, Wood Mackenzie data show. The Freeport LNG terminal in Texas was scheduled to receive minimal flows for a fifth day. Freeport was shuttered before former Hurricane Beryl made landfall on Monday.
Futures were under moderate downward pressure “despite highly elevated power burns and lower production levels,” according to Mobius Risk Group analysts. Instead, concerns about the restart of Freeport and the forecast for hot temperatures were driving the market, the analysts said.
Ahead of the U.S. Energy Information Administration’s (EIA) 10:30 a.m. ET natural gas storage report for the week ending July 5, analysts pointed to a near-seasonal build in the 50s Bcf.
A Reuters poll of 14 analysts produced a median injection estimate of 55 Bcf, with responses ranging from increases of 49 Bcf to 65 Bcf. NGI modeled a 55 Bcf build. By comparison, the year-ago and five-year average builds were each 57 Bcf.
Gas demand during the EIA sample period was reduced by the Fourth of July holiday, as well stronger wind generation and lighter week/week cooling degree days, NatGasWeather noted. The southern half of the country was hotter than normal, while northern regions, aside from the Northwest, were cooler than normal, the firm said.
Demand destruction from Beryl could extend through the next two EIA storage reports, according to EBW Analytics Group senior analyst Eli Rubin. In Houston, the hardest hit area by the storm, CenterPoint Energy Inc. said about 1.1 million customers remained without power as of 8 a.m. ET Thursday.
The prompt month contract began the week in deeply oversold territory, which from a technical perspective could signal more upside potential than downside, Evans on Energy analyst Tim Evans and DeCarley Trading analyst Carley Garner told NGI.
In contrast to the weakness in futures, physical prices have been stronger in July. NGI’s Spot Gas National Avg. was up 38.5 cents, or 23%, at an average $2.040 on Wednesday since the start of the month.
