US Natural Gas Futures Struggle Despite Summer Heat
Natural gas futures are struggling to gain momentum despite a recent rebound, as the market remains cautious about a full recovery. On August 12, the September NYMEX contract closed at $2.804/MMBtu, up 1.3%, but prices have retreated to around $2.78/MMBtu on August 13.
The support for natural gas comes from the expected high temperatures in the southern U.S., which will increase gas consumption by the power sector for air conditioning. However, strong supply and comfortable inventories remain a significant constraint for bulls, making it difficult to break above $3.00.
The latest EIA report showed that inventories increased by 33 Bcf in the week through July 31, reaching 3,117 Bcf, which is already 195 Bcf or 6.7% above the five-year average. The next EIA report is due today, August 13, with a market consensus pointing to an injection of around 30 Bcf.
The medium-term outlook from the EIA expects around 3,985 Bcf of gas in storage by the end of October, which would be 5% above the five-year average and at the highest level for the start of the heating season since 2016. The agency also lowered its forecast for the average Henry Hub price in Q3 to $2.87/MMBtu.