U.S. natural gas futures little changed on steady weather

by

U.S. natural gas futures little changed on steady weather

U.S. natural gas futures traded within a few cents of unchanged early Wednesday on forecasts for steady, warmer-than-normal weather as the market awaits direction from the storage report.

Front-month gas futures on the New York Mercantile Exchange fell 1.5 cents to $2.867 per million British thermal units at 8:08 a.m. EDT (1208 GMT).

The latest Global Forecast System weather model for the lower 48 U.S. states projected temperatures would hold steady at above-normal levels over the two weeks, with 222 population-weighted cooling degree days (CDDs). That compared with Tuesday’s 221 CDD forecast and the 30-year norm is 202 CDDs.

Thomson Reuters Analytics forecast consumption in the lower 48 states would average 61.7 billion cubic feet per day (bcfd) over the next two weeks. That compared with Tuesday’s 61.8 bcfd forecast and a 30-year norm of 57.9 bcfd.

Power generators were expected to use an average 33.7 bcfd of gas over the next two weeks, according to Thomson Reuters Analytics. That compared with 29.3 bcfd used a year earlier and a 30-year norm of 29.4 bcfd.

With coal futures up 6 percent since hitting their lowest level since 2007 in late June, the premium of gas futures over coal futures held just over $1 per mmBtu, making it more likely some generators will burn gas instead of coal.

In early estimates, gas production in the lower 48 states was expected to fall to 71.8 bcfd on Wednesday, the lowest since mid June, from 73.2 bcfd on Monday, according to Thomson Reuters Analytics. By comparison, production was 69.7 bcfd a year ago and a record high of 74.5 bcfd in December.

Net imports from Canada were expected to ease to 5.0 bcfd on Wednesday from 5.3 bcfd on Tuesday, while exports to Mexico were expected to edge up to a record high 3.4 bcfd on Wednesday from 3.3 bcfd on Tuesday.

In early estimates, analysts said utilities likely added 70

bcf of gas into storage during the week ended July 17. [EIA/GAS]

That compared with builds of 99 bcf the previous week, 92 bcf a year earlier and a five-year average increase of 53 bcf.

The U.S. Energy Information Administration will release its storage report at 10:30 a.m. EDT on Thursday.

https://www.reuters.com/article/2015/07/22/us-markets-natgas-nymex-idUSKCN0PW24F20150722