The NYMEX July natural gas futures contract moved sideways Thursday after the US Energy Information Administration announced a 96-Bcf build in storage inventories for the week that ended June 8, an injection substantially greater than market expectations.
The front-month contract settled at $2.965/MMBtu, up only 0.2 cent after trading in a range of $2.93/MMBtu to $2.975/MMBtu.
The injection "came in higher than anticipated," said Phil Flynn, senior market analyst at Price Futures Group.
The 96-Bcf injection was "pretty bearish," according to Flynn, noting the build was above the five-year average of 91 Bcf and a 88 Bcf build expected by a consensus of analysts surveyed by S&P Global Platts Analytics.
Thursday's build pushed nationwide gas stocks to 1.913 Tcf, down 29.1% compared with the same point last year and at a 21% deficit to the five-year average of 2.42 Tcf.
"The reason we are not seeing a big dip is the very strong demand expected in the Midwest this weekend due to hot weather," said Flynn. "The market is testing the lower end of the trading range, tempering down the bearishness of the report."
The most recent outlook from the National Weather Service calls for higher-than-average temperatures for much of the US. The exception will be the Southwest region, where the forecast shows milder temperatures.
US production was "strong" and averaged 77.6 Bcf/d in the past week, according to S&P Global Platts Analytics. Output is expected to climb to 77.9 Bcf/d over the next seven days, it added.
Total demand will rise 200 MMcf day on day to 73 Bcf Thursday, likely due to higher temperatures in the Northeast, according to Platts Analytics, and is expected to average 73.7 Bcf/d over the next seven days.
Much of the rise in demand will come from power burn, which increased 700 MMcf day on day Thursday to a summer high of 31.3 Bcf, largely due to higher residential and commercial demand in the Northeast.
The NYMEX settlement price is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).
