Natural Gas Futures Market News and Commentary
Oct Nymex natural gas (NGV19) on Friday closed down by -0.004 (-0.16%). Nat-gas prices moved lower for a third day Friday and posted a 1-week low. Negative carry-over from Thursday's bearish EIA inventory report weighed on nat-gas prices Friday. The EIA reported Thursday that U.S. nat-gas supplies rose by 84 bcf in the week ended Sep 13, above expectations of 76 bcf and also above the 5-year average of 82 bcf. Nat-gas prices were already on the defensive on the outlook for warmer-than-normal U.S. weather to persist into October, which will curb nat-gas demand for heating needs in the northern states. The Weather Company on Friday said it expects above-average temperatures across most of the U.S. from Sep 25-Oct 4. Nat-gas prices raced up to a 3-3/4 month high Monday on the near-term outlook for warm weather across the U.S. that should boost nat-gas demand from utilities to power air-conditioning. NOAA on Monday said that it expects warmer-than-normal weather across the entire U.S. during Sep 23-29. Also, Maxar on Tuesday said that it expects above-normal temperatures across the eastern two-thirds of the lower contiguous U.S. states through Oct 1. High U.S. nat-gas production continues to be a bearish factor with lower-48 nat-gas production Friday up +7.4% y/y at 91.637 bcf/d. Strong U.S. nat-gas output has caused U.S. nat-gas inventories to rise sharply in recent months to the current level of +14.5% y/y from -22.3% y/y in March. Thursday's weekly EIA nat-gas inventories rose by 84 bcf, which pushed nat-gas inventories up to a 10-month high of 3,103 bcf in the week of Sep 13. Inventories are up +14.0% y/y but are still -2.4% 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 +14.0% y/y, and (3) near-record U.S. natural gas production.