Storage Weighs on Natural Gas Prices Despite Hot Weather Outlook

Natural Gas Futures Struggle as Storage Remains High

The recent weather forecast calling for hot temperatures across much of the country has failed to boost natural gas futures, which continue to be held back by high storage levels.

The Energy Information Administration reported a 32 Bcf injection for the week ending July 17, slightly above expectations and near the five-year average. Working gas inventories stood at 3,056 Bcf, running about 6.4% above the five-year average and slightly below year-ago levels.

Despite the smaller build compared to earlier this month, the surplus remains wide enough to keep bears in control of the market. Short-covering pushed futures to $2.991 ahead of the report, but the number was quickly undone as traders looked at the bigger picture.

The threat of Tropical Storm Bertha has also kept traders from pressing long into a weather rally, with any disruption to Gulf Coast LNG facilities trapping more gas in the domestic system and making it harder for bulls to build a case that demand is catching up to supply.