Natural Gas News: Weekly Outlook Turns on EIA Storage, LNG Flows and Permian Supply
The latest forecasts call for temperatures in the upper 80s to 110s across most of the country over the next seven days with the Northeast and West running above normal through August 12. Friday’s short covering came on that forecast. A hotter revision centered on the Midwest and major Northeast cities keeps Thursday’s EIA number in play for a downside surprise. A cooler update and sellers reload.
Supply Is Heavy and More Is Coming
Lower-48 output averaged about 110.6 Bcf per day in early August, barely off July’s record. Baker Hughes reported the gas rig count fell by three to 124 last week. Fewer rigs, but 124 is still keeping output near the top of its range. The decline has not been steep enough to show up in the monthly numbers yet and nobody is shutting in production at these prices. Hugh Brinson hitting full capacity September 1 adds 1.5 Bcf per day from the Permian straight to the Gulf Coast in the month when air-conditioning demand starts rolling off and before winter heating picks up.
European storage at 58% entering August is the lowest for this time of year on record, and Asia is bidding for the same cargoes. U.S. terminals shipped about 3.3 million metric tons to Asian buyers in July while Europe remained the top destination. July exports came in at 10.48 million metric tons, down from 10.6 million in June. Freeport LNG has been running maintenance and Golden Pass has been operating below normal rates. Those two plants are the bottleneck. When they come back the export pull strengthens, but feedgas is not there yet and the surplus keeps building while the market waits.