Leading up to todays EIA Natural Gas Storage Report, Natural gas prices rose Wednesday as weather reports got slightly hotter, natural gas traders expected a potentially historically low weekly surplus and others tried to capitalize on a recent fall.
Natural gas for September delivery settled up 10.6 cents, or 3.9%, at $2.839 a million British thermal units on the New York Mercantile Exchange. The market has now given back nearly all its losses from the past two sessions. Natural gas has settled within a 22-cent range every session for nearly a month.
The market is divided between bearish (prices could fall) traders concerned about a record amount of gas in storage and bullish (prices could rise) traders betting historically low prices have sparked a rebound in the market. That played out again Wednesday with buyers swooping in after the recent losses, analysts and traders said. “We’re trading in a box,” said one Nymex trader. Slightly warmer weather updates on Wednesday also helped, analysts said.
Power plants consume more gas as people turn on their air conditioners, making summer heat one of the biggest drivers for gas demand. Forecasts show far above-normal temperatures spreading into the Great Lakes states and the Midwest next week. They are also calling for above-average temperatures in the Southeast, which is often the biggest source of added demand for gas-fired power during hot spells, according to analysts. Weather at times this summer has been historically hot, leading to record gas demand from power plants. Weather topped 90 and 100 degrees Fahrenheit across large parts of the country in recent weeks and could keep helping the market this week when the U.S. Energy Information Administration reports its weekly storage update Thursday, analysts said.
EIA Natural Gas Storage Report 8-4-16
Working gas in storage was 3,288 Bcf as of Friday, July 29, 2016, according to EIA estimates. This represents a net decline of 6 Bcf from the ( previous week seen here ). Stocks were 389 Bcf higher than last year at this time and 464 Bcf above the five-year average of 2,824 Bcf. At 3,288 Bcf, total working gas is above the five-year historical range.
Analysts estimated utilities added 2 billion cubic feet of gas into storage during the much hotter-than-normal week ended on July 29. As of 10:32 ET, natural gas futures were trading higher by 0.6% to $2.854.
Live market data