Natural Gas Intelligence projects a 55 Bcf storage build for the week ending July 3, even after intense heat baked the eastern two-thirds of the country. A jump in wind generation and holiday-tempered demand kept the draw modest, and Henry Hub prices moved only slightly higher.
A scorching week did less to tighten the US natural gas market than the heat alone would suggest. Natural Gas Intelligence projects storage to rise by 55 Bcf for the week ending July 3, an estimate that would lift underground inventories to 2,977 Bcf. That build would follow the 87 Bcf increase the US Energy Information Administration reported the week before, and it sits slightly above the five-year average of 51 Bcf.
Why the heat didn't tighten the market
Intense heat spread across the eastern two-thirds of the country last week, pushing highs into the mid-90s to 100s in cities including Chicago, New York and Washington, DC. But several factors blunted the demand it created. Wind generation rose 50% week over week, displacing some gas-fired power, and total cooling degree days ran lower than normal on every day except Thursday.
The heat wave also arrived just before the Independence Day holiday weekend, which could have tempered some demand as holidays typically do. Some power outages hit the East Coast as well. Even so, NGI's Henry Hub weekly average climbed 9.5 cents to $3.315/MMBtu.
Supply and prices hold in a familiar range
On the supply side, Lower 48 dry gas production ran around 109 Bcf on Monday, about 2.6 Bcf lower week over week. That easing supply, together with strong power burn topping 50 Bcf/d, still left August futures trading near $3.20 rather than $4 as a supply cushion capped the upside.
Weather models have started to trend cooler for the middle of July but remain hot overall, according to NatGasWeather. Any relief is likely to come from a system tracking across the northeastern United States around July 11-12.
Sources: Natural Gas Intelligence, Natural Gas Intelligence (snippet-based)
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