Natural Gas News: Can EIA Miss and Hotter Weather Extend the Gas Bounce?

The EIA reported a 28 Bcf injection for the week ended July 24, nine below the 37 Bcf estimate. Working gas rose to 3,084 Bcf, 6.4% above the five-year seasonal average. Stocks are 32 Bcf below last year but the five-year comparison is the one sellers are leaning on, and 185 Bcf above normal is not the kind of number that makes anyone nervous about supply.

One tighter build forces short-covering. It takes a string of them to convince the market the surplus is actually shrinking. Thursday’s EIA report is the next test, and buyers need the number to miss again by enough to show that August heat is doing real work on the storage picture. A comfortable build puts the $2.666 low back in play.

The Heat Needs to Move East

The weather forecast turned warmer across the western half of the country through mid-August. Texas and the Plains are running extreme temperatures and gas-fired power demand stays elevated where the heat is strongest. That has kept the market from falling apart but it has not been enough to turn it around.

The Midwest, Great Lakes and Northeast are where this trade gets decided. Those regions keep getting cooler breaks and storms that cut air-conditioning demand before it can build. This has been the pattern since June. A few hot days in the East would change the tone fast, but the forecast has to hold long enough to pull storage builds below normal for more than one week. A brief burst that fades before the next EIA report does not help.