London — The NYMEX September natural gas futures price fell Wednesday as dry gas production posted a second consecutive all-time high after revisions on Tuesday.
At 11:49 am EDT (1549 GMT), the front-month contract was trading 1.1 cents lower at $2.771/MMBtu. So far on Wednesday, September has traded in a range of $2.751/MMBtu to $2.788/MMBtu.
Tuesday's US dry gas production was 81.9 Bcf after revisions, breaking the all-time high for a second day in a row, according to S&P Global Platts Analytics.
After posting the all-time high on Tuesday, dry gas production is expected to fall 3.1 Bcf day on day to 78.8 Bcf Wednesday, according to Platts Analytics.
The relatively strong gas production seen of late is continuing even though Wednesday is expected to be the first day output has dipped beneath 80 Bcf since July 18, according to Platts Analytics.
The market is not worried about the year-on-year storage deficit because of said strength of gas production. The market believes the level of production will lead to higher storage builds in August and September ahead of the winter months, according to Kyle Cooper, an analyst at IAF Advisors.
A consensus of analysts surveyed by S&P Global Platts expects a 45 Bcf build in storage stocks to be announced by the US Energy Information Administration for the week that ended July 27.
The all-time highs for dry gas production, coupled with power burn backing off a bit in recent days, could help close the storage deficit going into the winter months.
Power burn is expected to fall 298 MMcf day on day to 34.2 Bcf on Wednesday, continuing its steady decline after a record breaking July, but is expected to rebound in mid-August, according to Platts Analytics.
Looking ahead, the most recent six- to 10-day forecast from the National Weather Service calls for warmer-than-average temperatures for many of the high demand areas in the Midcontinent and Northeast.
Power burn in the Southeast is forecast to fall the most Wednesday, with a decrease of 651 MMcf to 10.5 Bcf, but the region's burn through the first seven months of 2018 is still averaging 730 MMcf/d higher than during the same period last year at 9.388 Bcf/d, according to Platts Analytics.
