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James Hyerczyk
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Natural Gas

Natural gas futures are trading slightly lower on Thursday while hovering just below the multi-month high reached the previous session as traders await the release of the latest weekly government storage numbers at 14:30 GMT. The recent surge in cooling demand has made this report one of the most anticipated of the season.

At 13:04 GMT, September natural gas futures are trading 3.908, down 0.030 or -0.76%.

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Short-Term Weather Outlook

Natural Gas Intelligence (NGI) reported that Bespoke Weather Services said forecasts Wednesday tilted even hotter for the next two weeks, adding a couple more gas-weighted degree days and extending a week-to-date daily trend that has fueled futures.

“All of the changes lie in the forecast for next week, as we continue to see models shift hotter in locations from the lower Midwest into the South, especially Texas. This is tied into the addition of some blocking in the North Atlantic, which in summer is a hotter signal in the southern U.S.,” Bespoke said.

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US Energy Information Administration Weekly Storage Report

This week’s EIA report is expected to come in above the five-year average although that storage levels would remain at a deficit to historic norms.

NGI is reporting that a Reuters’ poll of analysts produced estimates spanning builds of 30 Bcf to 60 Bcf, with a median injection of 45 Bcf. A Bloomberg poll landed at a median injection of 43 Bcf, with estimates ranging from 30 Bcf to 48 Bcf.

NGI’s model predicted a 30 Bcf injection. The estimates compare with a 38 Bcf build in the year-ago period and a five-year average injection of 36 Bcf.

Daily Forecast

Current conditions are bullish but traders are still expressing a little caution ahead of today’s EIA report. Not necessarily because of report expectations, but because of the general uncertainty in the weather forecasts over the next 10-15 days. Bullish traders are hoping the forecasts continue to tilt to the hotter side.

Traders are also watching production levels which have averaged about 91 Bcf this week, or nearly 2 Bcf below 2021 highs reached in June. If this trend continues then coupled with robust demand, there may not be enough gas available to satisfy looming winter needs for the fuel to power furnaces.

As far as today’s report is concerned, Bespoke said, “Unless we see a build of 50 Bcf or more, the overall bullish narrative will remain difficult to break.”

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