Natural gas futures hovered in a narrow but positive range to launch trading Wednesday, with bulls focused on late August heat, lower production, and forecasts for an anemic storage print.
Following a 4.1-cent loss the prior session – the first decline in six days -- the September Nymex gas futures contract was up 3.6 cents to $2.184/MMBtu as of about 8:40 a.m. ET.
NatGasWeather said national demand would likely be “moderate” through the current trading week “due to comfortable temperatures across much of the northern half of the U.S.” Yet the southern half of the country “will be very warm to hot with highs of 90s-100s.”
The firm’s outlook called for “hot high pressure to expand over the interior U.S. late in the week through early next week with highs of upper 80s to 100s for strong national demand.”
Tropical Storm Ernesto was also gathering momentum in the Atlantic Ocean. It was expected to strengthen into a hurricane, although it was “favored to make a northward turn toward Bermuda, while remaining well offshore” of the East Coast, NatGasWeather said.
The firm chalked up Tuesday’s loss in part to profit-taking after the bull run that spanned most of last week and the start of the current trading period. Lower LNG volumes also had an impact.
Liquefied natural gas demand hovered around 12 Bcf/d on Wednesday, according to Wood Mackenzie. That was down from August highs above 13 Bcf/d.
Gelber & Associates analysts said Sabine Pass LNG was “primarily responsible” for the decline. “The terminal has dropped low enough in recent days to suggest that an entire train may be offline.”
Meanwhile, the recent rally was fueled by lower production estimates and expectations for a slim print with Thursday’s Energy Information Administration (EIA) storage report.
Wood Mackenzie estimated production was 100.6 Bcf/d on Wednesday, down from the 30-day average of 102 Bcf/d.
Flow data “out of Appalachia indicates that the region is still the culprit for recent weakness in production,” the Gelber analysts said. If levels were to “remain stagnant there well beyond expected maintenance timelines, it may indicate that producers have made more permanent cuts to output.”
For the EIA print covering the week ended Aug. 9, NGI modeled a 1 Bcf build. That is far from the 43 Bcf five-year average. Preliminary estimates submitted to Reuters ranged from a withdrawal of 8 Bcf to an injection of 30 Bcf, with an average increase of 19 Bcf.
As of Aug. 2, natural gas in storage totaled 3,270 Bcf, which put stocks 15% above the five-year average. That surplus has declined from a 2024 high of 40% in March. Yet it remains elevated with the market entering the final stretch of summer.
“With Thursday's report having the potential to print a draw, this is likely to lead to volatile trade as major players position ahead of it,” NatGasWeather said.
