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Energy Markets · Natural Gas · Storage · Weather
Analysts from S&P Global Commodity Insights and EBW Analytics expect US natural gas storage injections to remain below average, with a projected 27 Bcf build for the week ended August 2, due to persistent hot weather driving strong cooling demand across the Central and Eastern US.
This consensus 27 Bcf injection, while slightly above the year-ago 25 Bcf, is significantly below the five-year average of 38 Bcf for the corresponding week, according to EIA data. This undersized injection is expected to reduce the domestic inventory surplus for a fourth consecutive week, bringing it to 430 Bcf (15%) above the five-year average.
NYMEX September gas futures, after retreating to $1.86/MMBtu in late July, found resistance around the $2 level on August 6, trading up 6-8 cents. While market sentiment has been largely bearish due to stout production and a massive storage surplus, some producers are considering output cuts as prices near $2/MMBtu.
US natural gas production, modeled at 102.3 Bcf/d on August 6, has pulled back from a late July high of over 104 Bcf/d, with Appalachian, Permian, and Rockies supply notably lower. Strong gas-fired power burn and increased feedgas deliveries to LNG terminals drove a nearly 4 Bcf/d gain in US gas demand for the week to August 2, tightening the market by roughly 3 Bcf/d.
Looking ahead, Commodity Insights' model projects an even smaller 18 Bcf injection for the week ending August 9, further reducing the storage surplus.
