Here’s the latest on U.S. natural gas storage and futures.
Front month natural gas futures on NYMEX are trading at $2.838 per mmBTU after opening at $2.799 and touching a high of $2.866 and a low of $2.765..
Prices are exhibiting a firm tendency, after injection into storage grew far less than was anticipated, because the impact from Hurricane Isaac was worse than expected.
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According to the EIA report, natural gas injection was 28 Bcf last week and much lower than the expectations of 33 Bcf. This lower quantity into storage led to firmer prices.
“The 28 bcf net injection was bullish relative to both the consensus expectations for a 36-bcf build and the 60-bcf five-year average gain for the week. The data basically confirms that there was a larger net impact from Hurricane Isaac than had been assumed,” said Citi Futures energy analyst, Tim Evans, and quoted by Reuters.
Total gas in U.S. storage is currently at 3.402 Bcf, which is 13% higher than last year and 11% above the five-year average.
The outlook is that milder autumn weather will prove to be a dampener on cooling demand. Some portions of shut-in gas, due to the hurricane, will continue into next week. Also traders expect that there could strong nuclear outages that may counterbalance the autumn slowness in demand.
In any case, it appears that fundamentals for natural gas are on the mend – primarily because the rate of consumption of natural gas in power plants is still running high – 7.2 Bcf ahead of last year, according to a research report fromm NBF Energy Research Group. However, it still seems unlikely that prices can take out the $3 per mmBtu level, at which coal becomes cheaper to use, opposite of gas in power generation.
In synopsis, storage trends and capacities are at very comfortable levels and natural gas prices would be unable to spike too much in the event of any disruptions or storm disasters.
On a somewhat heartening note, the number of drilling rigs deployed for natural gas have declined for the 13th time in 15 weeks and may indicate that producers are looking to curtail supplies of natural gas.