Natural gas futures closed lower last week after failing to the upside following testing of a multi-month high earlier in the week. Mixed fundamentals were behind the volatile price action. It wasn’t necessarily bearish news that caps prices, but rather bullish news that dampened.
Last Friday, September Natural Gas Futures settled at $ 3.222, down $ 0.079 or -2.39%.
Weekly spot prices were higher amid scorching temperatures and high demand for cooling across much of western Lower 48, highlighted by huge surges, according to Natural Gas Intelligence (NGI). in California.
Reuters reported that electricity and natural gas prices in Texas and California soared last week to their highest level in months as homes and businesses turned on air conditioners to escape the waves of brutal heat.
Earlier this week, prices were also inflated by news from Enbridge’s Texas Eastern Transmission (TETCO) pipeline that a recent throughput restriction imposed by the Pipeline and Hazardous Material Safety Administration (PHMSA) will continue until the end of the week. end of summer.
After the initial upward push, prices pulled back and remained under pressure until Friday’s close as the weather forecast for the coming week cooled and a storm in the Gulf of Mexico (GOM) threatened to dampen demand. Meanwhile, a record-breaking reclassification that altered the government’s latest inventory report confused traders, forcing some out of the way and weighing on prices.
Energy Information Administration weekly storage report
The EIA reported Thursday that national natural gas supplies increased by 16 billion cubic feet for the weekend of June 11. The EIA said the data, however, included an adjustment to the week’s total to reflect a reclassification of some gas inventories from gas to base gas. Working gas is the volume of gas available on the market. The “implied flow for the week is a 67 billion cubic foot increase in working gas inventories,” the EIA said.
The EIA announced an implied build of 67 Bcf for the week, a few ticks below the median estimates, but the reclassification created a huge lack of headlines which drove some traders on the sidelines.
Prior to the report, analysts were looking for a lighter-than-usual storage injection with yesterday’s EIA inventory report. NGI’s model predicted an injection of 74 Bcf for this week’s report. Last year, EIA recorded a build of 86 Bcf for the similar week, and the five-year average is an injection of 87 Bcf.
Total inventories now stand at 2.427 billion cubic feet (Tcf), down 453 billion cubic feet from a year ago and 126 billion cubic feet below the five-year average, a declared the government.
Weekly weather forecast
US and European weather models have shown a trend from Tuesday to Friday of the coming week “not warm enough”, which could result in “only moderate domestic demand,” according to NatGasWeather.
Domestic demand will decline during the last full week of June, the forecaster added, “as weather systems crisscross the north and east-central United States.” Significant heat is still expected in the southwest, however, while a drought in California could continue to minimize. hydropower and exert upward pressure on gas demand.
Looking ahead to this week, early estimates call for modest construction that reflects the intense heat that stewed the western United States in June, according to NGI.
Bespoke Weather Services estimated an injection of 72 Bcf for the weekend of June 18; the five-year average is 83 Bcf. âWe remain on track for a warm and upscale June overall, placing us in the top five hottest on the all-time high,â the company said.
Forecasters, however, said cooling needs may ease some this week – after two weeks of high demand, NGI wrote.
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This item was originally posted on FX Empire