The NYMEX October natural gas contract headed higher Wednesday, supported by a bullish weather outlook and concerns of tropical storm activity in the Gulf of Mexico.
The contract rose 6 cents to settle at $2.887/MMBtu, having traded in a range of $2.808-$2.900/MMBtu.
The latest six- to 10-day and eight- to 14-day outlooks from the National Weather Service both call for temperatures above seasonal averages in much of the US, particularly in the heavily populated energy consuming areas of the Upper Midwest and New England.
The National Hurricane Center's latest two-day tropical weather outlook issued advisories on Hurricane Gaston, as well as two tropical depressions. Tropical Depression 9 is currently projected to move northeast and make landfall near central Florida on the Gulf Coast. The speed and the direction of this storm have affected production in the Gulf and along the region s coast. The latest five-day track shows the storm possibly affecting the upper Northeast coast near Labor Day.
US dry production fell slightly to 71.4 Bcf/d Wednesday from 71.5 Bcf/d Tuesday, nearly 0.8 Bcf/d below the six-day average, with the largest drop in the Southeast Offshore sample on Destin and Discovery pipelines, likely due to adverse weather in the Gulf of Mexico, according to Platts Analytics' Bentek Energy. Over the course of the next few weeks, dry production is expected to rebound to 71.8 Bcf.
US demand is slated to decrease over the same time frame from a current estimated 67 Bcf down to 65.4 Bcf, despite warmer-than-normal forecasts for the eastern half of the country.
In a morning email note, Tim Evans with Citi Futures attributed the uptick in the NYMEX to end-of-the-month book squaring activity ahead of Thursday's storage report, adding that "consensus expectations [are] running at 40-42 Bcf in net injections." Analysts surveyed by S&P Global Platts showed a similar consensus prediction at 43 Bcf for the injection.
