Despite a steep sell-off early in the week, natural gas futures were able to recover most of their losses to finish only marginally lower for the week. Oversold technical conditions probably contributed to the rebound rally as well as a bigger draw in inventories. However, the mixed weather forecast and above-average supply continued to keep a lid on prices.
September Natural Gas futures settled the week at $2.941, down $0.020 or -0.68%.
According to the U.S. Energy Information Administration, natural gas storage in the U.S. rose by 17 billion cubic feet in the week-ended July 21, below forecasts for a build of 24 billion. That compared with a gain of 28 billion feet in the previous week, an increase of 17 billion a year earlier and a five-year average rise of 47 billion cubic feet.
The EIA also said that total gas in storage currently stands at 2.990 trillion cubic feet. This is 9.2% lower than levels at this time a year ago but 3.7% above the five-year average for this time of year.
In other news, according to Baker Hughes, U.S. natural gas producers added six rigs last week.
Forecast
Steady, near-normal temperatures and cooling demand over the next two weeks could help hold natural gas futures in a range this week.
Meteorologists forecast temperatures during the month of August to be near normal after a warmer-than-average June and July.
Research firm Thompson Reuters is projecting U.S. gas consumption will slide to 76.0 billion cubic feet per day (bcfd) this week from 78.2 bcfd last week as the weather moderates and air conditioning demand eases before edging up to 76.7 bcfd in two weeks when temperatures are expected to rise a little.
U.S. exports are also expected to average 8.3 bcfd this week.
Looking ahead to Thursday’s U.S. Energy Information Administration’s weekly inventories report, analysts are expecting a 31 billion cubic feet injection into storage during the week-ending July 28, leaving inventories about 3 percent above normal for this time of year.
This figure compares with a 3 bcf withdrawal during the same week a year earlier and a five-year average build of 44 bcf.
This article was originally posted on FX Empire