Leading up to today's EIA Natural Gas Storage report, Natural gas prices ticked up Wednesday, reversing course after two days of losses as a storm brewing in the Gulf of Mexico continued to strengthen.
Natural gas for October delivery rose 6 cents, or 2.12%, to $2.887 a million Brutish thermal units on the New York Mercantile Exchange Wednesday.
Tropical Storm Hermine gained strength Wednesday as it headed toward Florida, and the National Hurricane Center said it is poised to be near hurricane strength by the time it makes landfall. While the storm appears to be moving away from natural gas production and pipelines further west in the Gulf, the government’s Bureau of Safety and Environmental Enforcement said Wednesday that companies have shut in some 10.59% of natural gas production in the gulf waters. Even so, the Gulf now accounts for a smaller share of natural gas production in the U.S., as onshore production from shale rock has boomed in recent years. While expectations of higher temperatures are still supporting natural gas prices, a consultant at Ion Energy Group in Houston, said the storm could cut into demand for natural gas. Natural gas traders are also waiting on weekly inventory data. The natural gas market is oversupplied, with inventories standing 11.7% above the five year average for this time of year as of Aug. 19.
Recap of last weeks EIA Natural Gas inventory Report.
EIA Natural Gas Storage Report 9-01-16
Working gas in storage was 3,401 Bcf as of Friday, August 26, 2016, according to EIA estimates. This represents a net increase of 51 Bcf from the previous week. Stocks were 238 Bcf higher than last year at this time and 334 Bcf above the five-year average of 3,067 Bcf. At 3,401 Bcf, total working gas is above the five-year historical range.
U.S. utilities likely added 41 billion cubic feet of natural gas to storage last week, extending six-year lows in summer inventories, a Reuters poll showed ahead of a weekly supply-demand report on gas due from the government.
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