The NYMEX October natural gas futures contract fell 2.8 cents to a $3.819/MMBtu settlement on Thursday after a larger-than-expected gas storage injection and forecasts for a milder turn to the weather starting next week. The prompt month contract has dropped a total of 24.6 cents, or 6%, over the last three days.
"We'd already sold off so much that even though it was a bearish [storage] report" it just didn't generate much of a price shock, said Phil Flynn, senior market analyst at Price Futures Group. "The injection was already priced in, and we bounced off support for the day."
The US Energy Information Administration on Thursday reported a 79 Bcf injection that lifted storage to 2.709 Tcf for the week ended Friday. Most analysts polled by Platts had expected a build in the 72-76 Bcf range.
"This little heat wave will be behind us after this week, so the market is looking a little more bearish," said Elaine Levin, president at brokerage PowerHouse. "We're just sort of drifting lower."
Further out, the odds of an El Nino winter, which could bring more snow to the Atlantic region, is down to a 60% chance of development this fall from an earlier 80% prediction, she noted. But early forecasts for the winter should be taken with a strong dose of caution, Levin added.
"There's a difference between a colder than normal winter and a polar vortex winter," she said.
Flynn said the market is "just hovering, waiting for weather forecasts and the next week's storage number," which could be lower as a result of the heat this week in many consumption regions.
The October gas contract traded Thursday in a range of $3.789-$3.879/MMBtu.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).
