Amid lower cooling demand expectations from the latest round of forecasts, natural gas futures pulled back in early trading Friday. The August Nymex contract was down 1.2 cents to $3.649/MMBtu at around 8:45 a.m. ET.
Both the American and European weather models dropped cooling demand from the outlook overnight, according to NatGasWeather.
“Most of the lost demand is across the northern U.S. next week as weather systems over southern Canada push further across the border,” the firm said. Overall, the pattern “remains hot enough to be considered bullish” from next Tuesday through July 15 but is “not quite as impressive in recent data after numerous Bcf in demand were shed for next week.”
Friday could prove to be another volatile session for the natural gas markets as traders position ahead of the Fourth of July holiday, NatGasWeather noted.
“There’s also Tropical Storm Elsa, whose track has yet to be locked in,” the firm said. “…The midday data will be closely watched to see if it offers any insight ahead of a dangerous weekend to hold. To our view, if there were to be selling this morning, be cautious of a mid-morning rally as typically occurs on Fridays ahead of risky weekends.”
Meanwhile, the Energy Information Administration (EIA) on Thursday reported a much larger-than-expected 76 Bcf injection into U.S. natural gas stocks for the week ending June 25.
The EIA figure fell slightly outside the range of expectations in major surveys and came in 3 Bcf above last year’s build for the similar period. The five-year average stood at 65 Bcf. Total working gas in storage rose to 2,558 Bcf for the week, 510 Bcf below year-ago levels and 143 Bcf below the five-year average, EIA said.
“Despite the larger-than-normal build, inventories sit at a 6% deficit to the five-year average,” analysts at Tudor, Pickering, Holt & Co. (TPH) observed in a note to clients early Friday. “As temperatures have soared over the past week, we see the build having little to no impact on prices as power generation is currently up about 5 Bcf/d week/week.”
Alongside power generation, the TPH analysts pointed to a roughly 2 Bcf/d disruption to supplies flowing out of the Northeast associated with issues at a MarkWest plant as another important factor for natural gas prices in the current week.
Liquefied natural gas feed gas demand “has remained strong north of the 10 Bcf/d mark. Mexico exports remain well above the 7 Bcf/d mark, and Canadian imports fell below the 5 Bcf/d mark,” the TPH analysts added. “As a result, Henry Hub continues its strength in pricing as the market continues to tighten on increased demand.”
August crude oil futures were off 10 cents to $75.13/bbl at around 8:45 a.m. ET.
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July 02, 2021 at 08:02PM
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Natural Gas Futures Pull Back Early as Traders Eye 'Dangerous Weekend to Hold' - Natural Gas Intelligence
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