Natural Gas News: Weather and LNG Support September Futures, but Storage Caps Gains

The EIA printed a 32 Bcf injection for the week ending July 17 and inventories rose to 3,056 Bcf. That is 183 Bcf above the five-year average and it is the number sellers keep coming back to after every hot forecast fades. The build was smaller than the prior week’s 41 Bcf and that shows power burn is doing some work but one smaller build is not a trend and the surplus has not tightened enough to make anyone uncomfortable on the short side.

Thursday’s report is the next test. A tight number after this week’s heat would be the first real evidence that demand is starting to cut into the cushion. Another normal or above-normal build and the market goes right back to selling the weather rally the way it has all summer.

Texas Heat Is Not Enough and the East Keeps Fading

ERCOT is running heavy summer loads and the interior West is expected to stay above normal into early August. The problem is the Midwest, Great Lakes and Northeast keep getting cooler breaks that pull national demand back from the levels that would actually force covering. The forecasts backed off from earlier in the week and that was enough to take the bid out of Friday’s trade.

Nobody wants to be aggressively short natural gas in late July with a heat dome one weather update away and that is the only reason this market has not broken down already. But one update away is not the same as here and September needs the maps to deliver broad persistent heat before the storage math changes.

LNG Is Holding the Floor Together

Europe at 54% storage against a 70% five-year average and Asia LNG prices at a four-month high on the Hormuz and Red Sea disruptions are keeping the export story alive underneath September. The global market needs U.S. cargoes and that demand is real. Freeport maintenance and uneven Gulf Coast operations have held domestic feedgas flows below their summer highs and that is the part that needs to change before LNG becomes something more than a reason the market has not fallen apart.