Houston — The NYMEX September natural gas futures contract rose 5.2 cents to settle at $2.949/MMBtu Wednesday. The growing storage deficit boosted supply concerns Wednesday as support was underpinned by lingering above-average summer temperatures.
The front-month contract traded between $2.884/MMBtu and $2.951/MMBtu on Wednesday.
Analysts surveyed by S&P Global Platts said they expect a 45-Bcf build to storage stocks to be announced by the US Energy Information Administration for the week that ended August 3.
The front month has gained some strength recently, increasing about 18 cents in the last six trading days.
Wednesday was the first time the front-month settle has topped $2.90/MMBtu since June 29. The front-month settle averaged $2.789/MMBtu in the month of July.
US power burn decreased 1.47 Bcf day on day to 39.33 Bcf on Wednesday, with the largest decline of 522 MMcf coming in the Southeast, according to S&P Global Platts Analytics data.
Power burn has decreased of late from record levels in a warmer-than-average July, but is forecast to tick back up in mid-August.
The most recent six- to 10-day temperature forecast from the US National Weather Service calls for warmer-than-average temperatures for most of the Upper Midwest and Northeast, which will likely add to the recent strength in the market.
US dry gas production decreased 500 MMcf to 80.2 Bcf Wednesday, after topping 80 Bcf for the past six days, according to Platts Analytics.
The strong dry gas production has mitigated supply concerns somewhat and has transformed the market for the winter months. Producers have demonstrated their ability to keep up with demand, and a storage deficit of this size in the past would have caused gas prices to reach $5/MMBtu or more, as opposed to the current levels of under $3/MMBtu, according to Kyle Cooper, analyst at IAF Advisors.
The NYMEX settlement price is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).
