Natural gas prices closed slightly higher on Thursday after the government’s weekly storage report showed that natural gas supplies in the U.S. rose less than expected last week. The market initially turned bullish on the news, but prices settled into a range after buyers failed to show up to extend the move.
October Natural Gas futures settled at $2.982, up $0.022 or +0.74%.
According to the U.S. Energy Information Administration, natural gas in storage in the U.S. rose by 43 billion cubic feet in the week-ended August 18. Traders had priced in a 43 bcf increase.
The EIA also said that U.S. natural gas storage stood at 3.125 trillion cubic feet, 6.7% lower than levels at this time a year ago and 1.5% above the five-year average for this time of year.
The current weather model shows highs only reaching the 70’s and lower 80’s. This should lead to a drop in demand.
Traders are also monitoring the weather in the Gulf of Mexico, which could significantly disrupt energy operations in the region.
Forecast
Traders are watching Harvey, a Category 1 hurricane, with 85 mph winds. According to reports, it could strengthen to a Category 3 hurricane with winds of at least 111 mph.
The reaction in the market will be determined by the location of the hurricane, if and when, it makes landfall. Natural gas prices could spike higher if there is damage to infrastructure or if production is disrupted.