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U.S. natural gas futures rose Thursday following a smaller than expected weekly storage build and forecasts for lower production and hotter weather than previously expected.
The Energy Information Administration reported an injection of 14B cf of gas into storage for the week ended July 28, compared with the 2018-22 average increase of 37B cf.
The relatively small injection narrowed the total inventory surplus to 12% above normal, still a sizable overhang but a full 10 percentage points less than the 22% surplus in late April, which means progress is being made, according to The Wall Street Journal's Dan Molinski.
Front-month Nymex natural gas (NG1:COM) for September delivery settled +3.5% to $2.565/MMBtu, snapping a three-session losing streak.
ETFs: (NYSEARCA:UNG), (UGAZF), (BOIL), (KOLD), (UNL), (FCG)
Gas-focused equities rose across the board: (AR) +5.1%, (RRC) +4%, (SWN) +3.1%, (CTRA) +2.4%, (EQT) +2.1%.
Analysts said the build was smaller than usual because power generators burned record amounts of gas for three days last week to keep air conditioners running during the heatwave covering most of the U.S.
Extreme heat raises the amount of gas burned to produce power for cooling, especially in Texas, which gets most of its electricity from gas-fired plants.
Another factor that has weighed on gas futures in recent months - futures are down ~43% YTD - has been persistently lower spot prices; next-day gas at the Henry Hub benchmark in Louisiana fell 2.5% to $2.43/MMBtu for Thursday, according to Reuters.
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