Natural Gas Futures Market News and Commentary
Sep Nymex natural gas (NGU19) on Friday closed down by -0.032 (-1.43%). Nat-gas prices moved lower Friday on forecasts for above-normal temperatures in the U.S. to retreat. Maxar on Friday forecast that hot temperatures will exit the central U.S. and Mideast during Aug 21-25. Until then, Maxar is forecasting above-normal temperatures across the lower 48 U.S. states. Nat-gas prices rallied to a 2-week high Thursday on a smaller-than-expected build in nat-gas supplies along with above-normal U.S. temperatures. The EIA reported Thursday that U.S. nat-gas inventories rose 49 bcf, below expectations of 58 bcf and right on the 5-year average. High U.S. nat-gas production is negative for nat-gas prices with lower-48 nat-gas production Friday up +8.3% y/y at 90.072 bcf/d. Higher U.S. nat-gas output has caused U.S. nat-gas inventories to rise sharply in recent months to the current level of +14.8% y/y from -22.3% y/y in March. Thursday's EIA report pushed nat-gas inventories up to a 7-3/4 month high of 2,738 bcf and up +14.8% y/y, although inventories are still -3.9% below the 5-year average. Big Picture Natural Gas Market Factors: Bullish factors include (1) solid demand from Mexico for U.S. nat-gas, (2) strong global natural gas demand due to firm global economic growth and the need to substitute for coal to reduce global CO2 emissions, and (3) significant U.S. LNG nat-gas export potential as more LNG ports are built in the U.S. and around the world. Bearish factors include (1) China's hike in its import tariff to 25% from 10% on U.S. LNG imports as of June 1, which effectively eliminated any Chinese buying of U.S. nat-gas, (2) high U.S. nat gas inventories that are up +14.8% y/y, and (3) near-record U.S. natural gas production.