Natural gas futures kicked off the trading week where the market finished the last – pushing upward on the heels of favorable weather forecasts, lighter supply readings and bullish bets by fund managers.
Coming off four consecutive gains last week, the September Nymex gas futures contract was up 9.4 cents to $2.237/MMBtu as of 8:40 a.m. ET on Monday.
Money managers boosted net long positions to a six-week high during the first full week of August, according to Commodity Futures Trading Commission and Bloomberg data. The unraveling of short positions brought new buyers into the natural gas market as cooling demand was poised to mount across the Lower 48.
“All U.S. regions are expected to reach above-average temperatures towards the end of the month,” said Rystad Energy analyst Christoph Halser.
Aside from seasonally normal conditions in northern markets this week, NatGasWeather said “high pressure will rule the southern half of the U.S. with very warm to hot temperatures of upper 80s to 100s for strong demand.” Such conditions were forecast to become more widespread next week, keeping air conditioners cranking deep into August.
In addition to the looming heat, NatGasWeather attributed recent price momentum to lower production amid several maintenance events and bullish misses in the past two government storage reports. It noted expectations for this week’s EIA report to show a small build or a draw -- “much lighter than” the five-year average 43 Bcf injection.
Wood Mackenzie on Monday estimated production at 100.9 Bcf/d, down from the 30-day average of 102.2 Bcf/d.
For the week ended Aug. 9, preliminary storage print estimates submitted to Reuters ranged from a withdrawal of 8 Bcf to an injection of 30 Bcf. The poll produced an average increase of 19 Bcf. That compared with a five-year average build of 43 Bcf.
The U.S. Energy Information Administration (EIA) reported an injection of 21 Bcf for the week ended Aug. 2. It was far below the five-year average build of 38 Bcf. EIA printed a similarly bullish result for the last full week of July as well.
As of Aug. 2, natural gas stocks stood at 3,270 Bcf. That was 15% above the five-year average, though the surplus has declined notably from a 2024 high of 40% in March after a mild winter.
On the heels of Hurricane Debby last week, NatGasWeather noted a tropical system in the east-central Atlantic Basin that was expected to track toward the Caribbean. The firm said it was expected to strengthen early this week, though it was “not necessarily headed toward the U.S.”
AccuWeather meteorologist Alyssa Glenny said the system was projected “to veer northward and then slightly northeast by late week…” It could potentially ramp up to a Category 3 or higher “for a time, before setting its sights on Bermuda by the upcoming weekend.” On this path, it would avoid landfall on the U.S. East Coast.
However, “while the storm is expected to journey toward Bermuda, if it takes a bit more of a southern track initially, it could be pushed closer to the East Coast,” making it a major wildcard for the week, Glenny said.
The next name on the hurricane season storm lineup is Ernesto, Glenny noted.
