Nearby futures are being pushed higher by what appears to be speculative short-covering, Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note. "We are not seeing much change in the weekend updates to the short-term temperature views as we reiterate this advanced stage of the cooling cycle in which any above-normal expectations will be receiving a muted response," he wrote.
Thomson Reuters projected US exports were expected to average 8.8 billion cubic feet per day (bcfd) this week, up 33 percent from the corresponding week last year. The natural gas market was also supported by expectations of an increase in demand for the fuel for power generation because of the total solar eclipse on Monday, analysts said.
"The market is pretty excited by expectations of a spike in natural gas demand because we have to replace a lot of solar power due to the eclipse," said Phil Flynn, analyst at Price Futures Group in Chicago. "Psychologically that has given the market a short-term boost." According to a US weather model, while temperatures are likely to be near normal until early September they were seen lower than the hotter weather anticipated last week.
"We are nearing a time when a change in weather forecasts won't make much of a difference," said Kyle Cooper, consultant for ION Energy in Houston. Early estimates showed utilities likely injected 40 billion cubic feet of gas into storage during the week ended August 18. That compares with an injection of 12 bcf for the same week a year ago and a five-year average addition of 53 bcf.
If correct, total stocks would rise to 3.122 trillion cubic feet (tcf). That would put inventories about 7 percent below the same week a year ago, and just 1 percent above the five-year average for the week. Analysts have said utilities probably would stockpile just 1.7 trillion cubic feet of gas during the April-October injection season. Relatively low output, rising sales abroad and higher-than-average cooling demand earlier this summer are limiting the quantities of gas going into storage.
The projected build, which is below the five-year average of 2.1 tcf, would put inventories at 3.8 tcf at the end of October, below the year-earlier record of 4.0 tcf and the five-year average of 3.9 tcf. US gas production in the lower 48 states increased to an average of 72.8 billion cubic feet per day over the past 30 days from 71.4 bcfd a year earlier. That was still short of the 73.8 bcfd during the same time in 2015, Reuters data showed.
US natural gas speculators boosted their net long positions for the first time in four weeks in the week to August 15, betting prices will rise on the chance there will be less gas than usual in storage this winter, data from the US Commodity Futures Trading Commission showed on Friday.
Copyright Reuters, 2017