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The September natural gas wholesale contract was slightly higher yesterday as the industry awaits the EIA storage release today with moderating temperatures forecasts in sight for the Midwest and the Northeast. Texas continues to be a scorcher with a record setting 17 straight days of 100 degree days yesterday. So as the natural gas market goes back and forth in this seesaw fashion, energy traders continue to monitor the upcoming winter forecasts that continue to be published with initial inklings that this winter will continue to be colder than normal as with the last two winters.
In the lone star state, the warmest month on record in Houston is about to get just a little bit hotter since Houston hit 103 degrees on Wednesday at Bush Intercontinental Airport, the National Weather Service's official site, and today the temperature might even tick a bit higher. If anything, the high pressure ridge that's snuffed out rain chances and kept the Houston region sunny and warm will strengthen during the next couple of days. As a result, the weekend also looks hot, but forecasters believe the torrid conditions finally might begin to moderate next week. That's when the high should begin moving westward. One local forecaster was even quoted as indicating that “Even though this may not signal a major change in the weather pattern, it is hinting at the possibility of more daytime showers and thunderstorms associated with the sea breeze front,". It also should end the city's record streak of 100-degree days, now at 17 continuous days.
As we do on every Thursday, we’ll discuss the storage levels on the rest of the commentary. U.S. natural gas inventories are expected to have climbed by 49 billion cubic feet last week, a Reuter’s poll of industry traders and analysts showed on Wednesday. There were 21 participants in the Reuters poll, with injection estimates ranging from 43 bcf to 61 bcf. Storage rose an adjusted 28 bcf for the same week last year. The five-year average build for that week is 43 bcf.
In last week's report, for the week ended Aug. 5, overall storage climbed 25 bcf to 2.783 trillion cubic feet, well below the Reuters estimate of 37 bcf, the year-ago gain of 36 bcf and the five-year average increase for that week of 37 bcf. The build widened the inventory shortfall relative to last year for the first time in eight weeks, raising the total by 11 bcf to 197 bcf, or 7 percent. It also increased the gap to the five-year average by 12 bcf to 80 bcf, or 3 percent. While the gap versus a year earlier is still big, most traders expect it to shrink as late summer weather turns milder and slows demand. The gap peaked this year at 275 on June 10. A build this morning at the Reuters estimate would trim the shortfall relative to last year by 21 bcf to 176 bcf, or 5.9 percent, and reduce the deficit to the five-year average by 6 bcf to 74 bcf, or 2.5 percent.
In the past four reports, total stocks rose 172 bcf, or 43 bcf per week, versus a 151 bcf adjusted build for the same one-month period last year and a 200-bcf five-year average gain for that period. If weekly stock builds through October match the five-year average pace, inventories will begin next heating season with 3.523 tcf, 8.3 percent below last November's record high of 3.84 tcf and 2.2 percent below average for that time of year. To get inventories above last year's high by Nov. 1, weekly injections must average 82 bcf for the remaining 13 weeks of the stock building season, well above the five-year average of 57 bcf for that period.
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