NYMEX September natural gas futures settled Wednesday at $3.823/MMBtu, down 5.4 cents, as traders look toward a strong weekly storage injection and temperature outlooks shift slightly cooler.
Aaron Calder, senior analyst at Gelber & Associates, said natural gas reversed direction Wednesday "after temperature models did the same thing last night. The strong ridge that was forecast yesterday has regressed back to its original strength and mild temperatures are expected to dominate the first part of September."
Calder also said traders are "pricing in [Thursday's] injection which is estimated to be much larger than normal once again" and will be "influenced by last week's mild temperatures and will likely be a continuation of the type of injections we've seen throughout August."
A Platts consensus of analysts expects the US Energy Information Administration to report an injection in the range of 81-85 Bcf. Such a build would be higher than both the 58 Bcf reported last year as well as the 48 Bcf five-year average.
"$3.75[/MMBtu] has proven to be a good support level. Winter is coming and with it the unknown. The market is on less bearish ground after the storage number" came in lower than expected last week, said Jay Levine, broker at Enerjay.
"I think last week's storage number put just a bit of a question mark in the bears' playbook. The market is not thinking it, but we are still in summer. Late summer heat could throw the market a curveball, although right now we're in a comfortable zone and not in a rush to go anywhere," Levine added.
The contract traded Wednesday between $3.792/MMBtu and $3.888/MMBtu.
