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James Hyerczyk
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Natural Gas

Natural gas futures are trading higher shortly before the release of the weekly government storage report as forecasts calling for intensifying heat continue to underpin prices, while offsetting estimates predicting a relatively large storage build.

In other news, spot gas prices are mixed, while liquefied natural gas (LNG) feed gas demand have been below average due to ongoing maintenance.

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At 11:08 GMT, July natural gas futures are trading $3.141, up 0.012 or +0.38%.

NatGasWeather Short-Term Outlook

NatGasWeather said on Wednesday that the European Centre (EC) and the American Global Forecast System (GFS) models each added a few cooling degree days overnight. Strong heat was seen continuing through the weekend, but then easing to more seasonal next week as hot high pressure was forecast to shift over the western half of the country. In the eastern third of the country, more comfortable temperatures were expected, along with showers.

“This cooler-than-normal pattern over the eastern U.S.,” forecast to run from Tuesday through June 21, “is what’s preventing the pattern from being considered solidly bullish,” said NatGasWeather.

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Energy Information Administration Weekly Storage Report

Traders are looking for today’s EIA storage report to show a sizable build, with estimates ranging from an injection in the 90s to low 100s. The consensus is calling for an injection of 99 Bcf.

Natural Gas Intelligence (NGI) is reporting a Bloomberg survey of nine analysts produced an injection range between 91 Bcf and 104 Bcf, with a median forecast of 110 Bcf. A Wall Street Journal poll of 13 analysts had a wider range up to 111 Bcf, with an average build of 100 Bcf. Reuters polled 19 analysts, whose estimates ranged from a build of 90 Bcf to 110 Bcf, with a median injection of 97 Bcf. NGI’s model predicted a 100 Bcf build.

That would compare with last year’s 95 Bcf injection for the similar period and the 92 Bcf five-year average, according to EIA.

Daily Forecast

On the downside, $3.089 to $3.054 is support, while taking out $3.204 could trigger a surge into $3.245.

While today’s report may generate a triple-digit injection, the next two are likely to return to normal. Meanwhile, the potential for hotter patterns by the start of July will continue to increase.

For a look at all of today’s economic events, check out our economic calendar.
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