Natural Gas Outlook Clouded by Temperature Forecasts and Supply Surge
The latest forecast for temperature across most of the country calls for highs in the upper 80s to 110s over the next seven days, with the Northeast and West running above normal through August 12. This forecast is seen as a contributing factor to Friday's short covering.
However, a hotter revision centered on the Midwest and major Northeast cities has kept Thursday's EIA number in play for a downside surprise. Supply remains heavy, with the Lower-48 output averaging about 110.6 Bcf per day in early August, barely off July's record.
The gas rig count fell by three to 124 last week, according to Baker Hughes, but this decline has not been steep enough to show up in the monthly numbers yet. Hugh Brinson hitting full capacity September 1 is expected to add 1.5 Bcf per day from the Permian straight to the Gulf Coast.
European storage at 58% entering August is the lowest for this time of year on record, and Asia is bidding for the same cargoes. U.S. terminals shipped about 3.3 million metric tons to Asian buyers in July, while Europe remained the top destination.