A bearish EIA weekly storage report on Thursday dropped the natural gas market back toward the early week lows set on Monday but was unable to push down to new weekly lows.
Today's EIA weekly storage report came in at an unexpectedly large 69 Bcf injection which was 2 Bcf above the 47-67 Bcf pre-report range of estimates and 8 Bcf above the 5-year average.
Current gas in storage of 3,099 Bcf is now 2.9% above the 5-year average with 10 weeks to go in the injection season. The market remains on pace to reach the 3,850-4,000 Bcf level by the end of the year.
Upcoming weather forecasts remain hot in the eastern U.S. But this was also the case over the past week yet 69 Bcf of gas was still put into storage. September temperatures on average are 7 degrees below the August average as the market enters into the post-summer shoulder season. Above normal temperatures are still supportive for natural gas prices during September but not as much during August.
On the production front, dry natural gas production for week ended 08/26 rose by .3% to 72.3 Bcf per day according to the EIA. However, production still remains below the July 72.5 Bcf per day high falling 6 out of the past 13 weeks. While certainly not in a free fall, production does seem to be stagnating as the natural gas rig count of 211 is just 2 rigs above an all-time low.
Weather forecasts should be supportive for prices but it is going to be tough to keep the market in a sideways range in consideration of today's unexpectedly high injection. Once summer weather demand dissipates, new price lows are expected.
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