Entelrgy

EIA reports a weekly rise of 62 billion cubic feet in U.S. natural-gas supplies

The U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas rose by 62 billion cubic feet for the week ended July 12.

The data were expected to show a build of 65 billion cubic feet, on average, according to analysts polled by S&P Global Platts.

Total stocks now stand at 2.533 trillion cubic feet, up 291 billion cubic feet from a year ago,

but 143 billion below the five-year average, the government said.

August natural gas NGQ19, +0.09% traded at $2.314 per million British thermal units, up 1 cent from Wednesday’s settlement.

Natural gas prices tumbled on Thursday despite a smaller than expected build reported by the Department of Energy on Thursday.

Stronger future production forecast by the Energy Information Administration in their Short-term Energy outlook put downward pressure on prices.

The weather is expected to be normal over the next 2-weeks which will likely have a limited effect on the price of natural gas.

Currently, the prompt month NG contract is trading slightly higher at $2.347 up 2 cents.

Technical Analysis

Natural gas prices dropped sharply on Thursday, declining 2.6% and poised to test the June lows at 2.305.

A close below this level would put prices on a path to test the 2016 lows at 1.91.

Inventories Rose Less than Expected

Natural gas inventories rose less than expected according to a report from the EIA.  

This represents a net increase of 102 Bcf from the previous week. Expectations were for inventories to rise by 114 Bcf.  

Stocks were 189 Bcf higher than last year at this time and 230 Bcf below the five-year average of 2,318 Bcf. At 2,088 Bcf, total working gas is within the five-year historical range.

EIA forecasts that U.S. dry natural gas production will average 90.6 billion cubic feet per day (Bcf per day) in 2019, up 7.2 Bcf per day from 2018.

EIA expects natural gas production will continue to grow in 2020, albeit at a slower rate, averaging 91.8 Bcf per day next year.

Natural gas futures are trading higher on Wednesday, clawing through several retracement levels as bulls try to trigger a technical breakout to the upside.

The strong rally actually started on Tuesday after increasing production and a lack of significant cooling demand drove prices to their lowest level since April 25.

The late session technical bounce wasn’t strong enough to produce a potentially bullish closing price reversal bottom, but it was significant enough to confirm a value area for speculators between $2.550 and $2.534.

At 12:28 GMT, July natural gas futures are at $2.624, up $0.040 or +1.55%.

While the strong rally may be an indication of position-squaring and short-covering, speculators are still facing a wall of resistance at $2.632 to $2.641.

The buying pressure will increase over $2.641 with $2.659 the next target. If this move is able to generate enough upside momentum then the rally may even extend into $2.679.

It will be difficult to extend the rally beyond this level, however, unless the weather turn extremely hot.

The price action since April clearly shows that buyers have identified $2.550 to $2.534 as a value area. Furthermore, major long-term bottom is $2.510.

Short-Term Weather Outlook

According to NatGasWeather for May 29 to June4, “Weather systems with showers and thunderstorms continue across the West and Plains with highs of 60s and 70s,

although gradually warming into the 70s to 90s by the weekend. Texas to the Mid-Atlantic Coast will be very warm to hot with highs of 80s & 90s as strong high pressure dominates,

hottest across the Southeast with 95-100F. Mostly warm conditions continue from Chicago to NYC with highs of 70s and 80s, although with showers across the Upper Midwest.

Hot high pressure over the Southeast will weaken late week in the week through the weekend as weather systems advance across the northern US with showers.

Overall, demand will be moderate through Thursday due to hot conditions over the southern US, then low as coverage and intensity of 90s eases.”

Natural gas futures are trading lower on Wednesday . The May natural gas futures are trading $2.52, down $0.044.

Bearish traders could also be reluctant to short into weakness this close to major support at $2.50.

Changes in Forecast Coming?

“If current weather forecasts hold, the past few days could prove to be an important turning point for natural gas futures,” according to EBW Analytics Group.

“Prior to this past weekend, temperatures in Week 2 had been expected to be cool enough to potentially push prices back up, at least for a short-time period.

The weekend forecast shift, however, most likely negates this scenario,” the firm said.

“If current forecasts verify, however, the resulting drop-off in weather-driven demand is likely to pull natural gas prices down further,

even if Sabine Pass returns to full capacity,” EBW CEO Andy Weissman said.

Storage Deficit Likely to Shrink

Even if cooler temperatures return, buyers are not likely to overcome strong headwinds which will likely prevent a significant rally at any time during the next few weeks.

This is because “monster injections” are expected the next two weeks, with a series of 100-plus Bcf injections to follow.

Natural gas futures are trading lower on Monday as downside momentum threatens to challenge last week’s low amid mild weather forecasts and warnings of a possible triple digit injection in this week’s government storage report.

At 10:10 GMT, May Natural Gas futures are trading $2.609, down $0.052.

Daily Forecast

Downside momentum on the daily chart has put the June natural gas futures contract in a position to take out the last main bottom at $2.675. This will reaffirm the downtrend and put the market in a position to challenge the February 7 main bottom at $2.647, followed by the low for the calendar year at $2.623.

From a longer-term perspective, taking out $2.686 will also put the market on the weak side of a weekly retracement zone. This will put the market in a bearish position.

Expectations of increasing injections could be driving the price action today. “Continued loose balances point to another hefty injection versus the five-year average next week as well,” according to Bespoke.

Last week, Tudor, Pickering, Holt & Co. said there was a potential for the EIA to report a 100 Bcf-plus build, which would be five times the five-year average. Most analysts, however, are estimating a build closer to around 90 Bcf.

Natural gas futures are trading lower on Tuesday shortly before the regular session opening.

The market turned lower after hitting its highest level since December 24 earlier in the session.

We’re in a weather market so volatile two-sided trading can be expected.

Furthermore, the current four day rally from 2.809 to $3.373 may have been too much, two soon, putting the market in overbought territory.

Although the short-term uptrend may not be affected, the market may be ripe for a pull-back into support while investors continue to digest the weather forecasts.

At 12:30, GMT, March natural gas futures are trading $3.268 to $0.021 or -0.64%.

Forecast

The market is likely to remain underpinned by the bullish six- to 10-day and 11-15 day weather forecasts, however,

there is a warm period between the cold blasts that may encourage some light profit-taking. We could be looking at that today.

The current intraday chart pattern indicates that investors will have to decide between buying strength and playing for a breakout

over today’s intraday high at $3.373, or wait for a pullback into the support zone at $3.091 to $3.024

The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. decreased by 91 billion cubic feet in the week ended Jan. 4, compared to forecasts for a draw of 76 billion.
Although prices extended gains after in a knee-jerk reaction to the larger-than-expected decline, it quickly returned to levels seen prior to the release.
At 10:37 AM ET (15:37 GMT), natural gas for delivery in February on the New York Mercantile Exchange rose 4.5 cents, or about 1.5%, to trade at $3.029 per million British thermal units.
Total U.S. natural gas storage stood at 2.614 trillion cubic feet, 7.2% lower than levels at this time a year ago and also 15.1% below the five-year average for this time of year.nergy Information Administration said in its weekly report that natural gas storage in the U.S. decreased by 91 billion cubic feet in the week ended Jan. 4, compared to forecasts for a draw of 76 billion.
Although prices extended gains after in a knee-jerk reaction to the larger-than-expected decline, it quickly returned to levels seen prior to the release.
At 10:37 AM ET (15:37 GMT), natural gas for delivery in February on the New York Mercantile Exchange rose 4.5 cents, or about 1.5%, to trade at $3.029 per million British thermal units.
Total U.S. natural gas storage stood at 2.614 trillion cubic feet, 7.2% lower than levels at this time a year ago and also 15.1% below the five-year average for this time of year.

Natural Gas January 9, 2019

Natural gas futures are trading flat-to-lower in limited trading early Wednesday. Traders continue to adjust positions while waiting for the short-term or mid-term weather forecasts to confirm or

deny the return of cooler temperatures later in the month. Despite the lack of conviction in the futures markets at this time, the spot market posted double-digit gains across the eastern two-thirds of the Lower 48,

according to the Natural Gas Intelligence report.

The February Natural Gas contract is trading at $2.95, down $0.01.

Weather Opinions

Bespoke Weather Services blamed the up-and-down price action to shifting warmer and cooler trends in the various weather model runs.

“A disturbance moving across the Great Lakes is forecast to intensify significantly as it traverses New England” Tuesday night into Wednesday, the National Weather Service (NWS) said. “This will result in colder air to filter into the area, changing rain and freezing rain back to snow along with increasing winds from the north.

“Up to a foot of snow is possible across northern Maine by the time the storm moves further away into the Canadian Maritimes on Thursday. Colder air will usher into much of the eastern U.S. as the storm moves away and a high pressure ridge builds in from the Plains.”

According to NatGasWeather for January 9-15, “A strong cold front will push across the Great Lakes and Northeast the next several days with lows behind the cold front reaching the 0s to 20s for strong demand. However, much of the rest of the country will be mostly mild with highs of 40s to 70s to counter. A weather system will track into the West Coast the next few days with rain and snow, but with only slight cooling. This weekend into early next week will bring a reinforcing cold shot across the East, followed by rapid warming mid-week, while the rest of the country remains mostly mild. Overall, national demand will be increasing to moderate-high late this week into early next week.”

The U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas rose by 86 billion cubic feet for the week ended Sept. 14.

Analysts polled by S&P Global Platts had forecast a climb of 83 billion cubic feet, while the average over the last five years for the same week was a rise of 76 billion.

Total stocks now stand at 2.722 trillion cubic feet, down 672 billion cubic feet from a year ago, and 586 billion below the five-year average, the government said.

October natural gas NGV18, +0.24% traded at $2.913 per million British thermal units, up half a cent from Wednesday’s settlement.

It was trading at $2.90 before the supply data.

Storage Report Summary:
Working gas in storage was 2,722 Bcf as of Friday, September 14, 2018, according to EIA estimates.

This represents a net increase of 86 Bcf from the previous week. Stocks were 672 Bcf less than last year at this time and 586 Bcf below the five-year average of 3,308 Bcf.

At 2,722 Bcf, total working gas is below the five-year historical range.