EIA Report and Heat Wave Set Stage for Natural Gas Market Volatility

The recent EIA report showed a 28 Bcf injection for the week ended July 24, which was nine below the estimated 37 Bcf. This brought working gas to 3,084 Bcf, a 6.4% increase above the five-year seasonal average.

However, stocks are still 32 Bcf below last year's levels, and the market is relying on the five-year comparison to gauge supply. The current surplus of 185 Bcf is not considered alarming, but buyers need the EIA report for Thursday to miss expectations again in order to signal that August heat is affecting storage.

The weather forecast predicts warmer temperatures across the western half of the country through mid-August, particularly in Texas and the Plains. This has kept gas-fired power demand elevated where the heat is strongest. But the Midwest, Great Lakes, and Northeast regions are not experiencing extreme heat, which could impact the market's momentum.