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James Hyerczyk
Natural Gas

Natural gas futures are trading nearly flat for a second session on Friday, underpinned by a smaller-than-expected storage injection, but capped by an uncertain demand picture in the wake of the COVID-19 pandemic and as a tropical storm in the Gulf of Mexico nears key production facilities.

In other news, spot gas prices declined across the country, with Natural Gas Intelligence’s (NGI) Spot Gas National Average down 7.0 cents to $1.665.

“Additionally, the gas market has this week taken note of feed gas volumes being delivered to liquefied natural gas (LNG) terminals rising off recent lows, as well as summer heat driving increased power burns,” Natural Gas Intelligence wrote.

At 11:21 GMT, July natural gas is trading $1.834, up $0.012 or +0.66%.

US Energy Information Administration Weekly Storage Report

The U.S. Energy Information Administration (EIA) reported Thursday that domestic supplies of natural gas rose by 102 billion cubic feet for the week-ended May 29. That was less than the average increase of 110 billion cubic feet forecast by experts.

Ahead of the report, Bespoke estimated a build of 106 Bcf in the report, which falls a few Bcf below consensus. A Wall Street Journal poll of 12 analysts, brokers and traders produced injection estimates ranging from 96 Bcf to 122 Bcf, with an average of 110 Bcf. A Bloomberg survey had a tighter range of forecasts with a median of 111 Bcf, while a Reuters survey landed at a 110 Bcf injection. NGI estimated a 104 Bcf build.

Total stocks now stand at 2.714 trillion cubic feet, up 762 billion cubic feet from a year ago, and 422 billion cubic feet above the five-year average, the government said.

Last year, the EIA recorded a 118 Bcf increase in storage for the similar week, while the five-year average build stands at 103 Bcf.

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Short-Term Weather Outlook

According to NatGasWeather for June 5 – June 11, “Texas, the South, and Southeast will be very warm to hot with highs of 80s to 90s. Cooler air with showers will push into the Northwest this weekend, while California and the Southwest remain hot with highs of 90s and 100s. The Midwest and Northeast will be warm with 70s and 80s, including locally near 90F. Next week favors a weather system with cooling over the West into the Plains, heavy showers over E. Texas and the South as tropical system Cristobal makes landfall, and very warm over the Great Lakes, Ohio Valley and East.”

Daily Forecast

All eyes are likely to be on the movement of Tropical Storm Cristobal on Friday and over the weekend. The storm made landfall in Mexico on Wednesday, and it could hit parts of the United States this weekend, including Texas and Louisiana bringing with it heavy rains, high winds and a storm surge, according to the National Oceanic and Atmospheric Administration.

Natural Gas Intelligence said “Exploration and production companies were tracking the storm on Thursday and some had begun evacuating nonessential personnel from facilities that could be affected.”

“It’s expected to remain below hurricane strength but will provide minor production disruptions in the Gulf of Mexico and potentially inland as well,” developments that could boost gas prices, NatGasWeather said. “However, there’s also expected to be disruptions to LNG exports and demand destruction from showers and cooler air.”

A shutdown of production facilities over the weekend could spike prices higher on Monday.

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