Leading up to Thursday's EIA Natural gas Storage, wholesale contracts were down again on Wednesday morning, one day after posting its biggest daily loss in eight months as warm temperatures in key U.S. gas-consumption regions gave way to cooler readings.
Natural gas for delivery in August on the New York Mercantile Exchange fell to a session low of $2.697 per million British thermal units, its weakest since June 27then settled slightly higher at $2.786, up 2.2 cents, or 0.79%.A day earlier, natural gas plunged 22.3 cents, or 7.47%, the steepest one-day loss since late October, after updated weather forecasting models showed that temperatures may be mostly normal in the lower 48 states from July 15 through July 19.
Forecasts originally called for warmer than normal readings across most parts of the U.S. during the period. Meanwhile, natural gas traders looked ahead to fresh weekly information on U.S. gas inventories to gauge the strength of demand for the fuel (see below).Natural gas prices are up nearly 50% since late May as expectations have grown that hot summer weather will lead to heavy demand.
Natural gas wholesale contracts for August jumped to $2.998 last week, the highest since May 2015, as hot summer temperatures across most parts of the U.S. raised expectations for power generation demand to meet air conditioning needs. A rally for natural gas this time of year isn't unusual. Natural gas use typically hits a seasonal low with spring's mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning.
7/7/2016 EIA Natural Gas Storage Report:
Working gas in storage was 3,179 Bcf as of Friday, July 1, 2016, according to EIA estimates. This represents a net increase of 39 Bcf from the previous week. Stocks were 538 Bcf higher than last year at this time and 599 Bcf above the five-year average of 2,580 Bcf. At 3,179 Bcf, total working gas is above the five-year historical range.
Analysts forecasted utilities added 43 billion cubic feet of gas into storage during the week ended July 1. As of 10:32 ET, natural gas futures were trading higher by 1.8% to $2.837; however ended the day in the red down at $2.777.
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