Heat Wave and Rising LNG Feedgas Seen as Potential Catalysts
U.S. natural gas futures edged higher Friday but remained stuck in a range below $3, as traders digested a storage report that analysts described as modestly supportive while looking ahead to a return of summer heat.
The Nymex front-month contract settled at $2.928 per million British thermal units, up 0.4% on the day, according to market data. The gain was not enough to break the narrow trading band that has held prices below the $3 threshold in recent weeks.
The U.S. Energy Information Administration reported a weekly storage build of 32 billion cubic feet, a figure that Eli Rubin of EBW Analytics called “modestly supportive” in a note. Despite the injection, which was near the low end of historical averages for this time of year, the market failed to sustain upward momentum.
“While bears beat back the bullish test higher, however, searing heat will return early next week, particularly in Texas, while Corpus Christi LNG feedgas nominations are creeping up,” Rubin said.
The return of extreme heat in Texas, one of the largest natural gas-consuming states for power generation, could lift demand for gas-fired electricity. Rising feedgas nominations at the Corpus Christi liquefied natural gas export terminal also point to improving export demand, a key factor for U.S. gas prices.
Rubin added that early August heat could provide a catalyst to retest the $3 per mmBtu level. The market has been rangebound for much of the summer as traders weigh above-average storage levels against weather-driven demand and fluctuating LNG export volumes.
Traders are now watching extended weather forecasts and LNG export flow data for signs of a sustained breakout.