EIA Reports Smaller-Than-Expected Storage Build
The U.S. Energy Information Administration (EIA) reported a storage increase of 21 billion cubic feet (Bcf) for the week ending August 2, 2024. This figure fell short of market expectations, which had predicted a build of 25-27 Bcf. The lower-than-anticipated storage increase signals a tightening supply, which has provided support for the ongoing price recovery. Current storage levels stand at 3,270 Bcf, 248 Bcf higher than this time last year and 424 Bcf above the five-year average.
Production Steady as Cooler Weather Conditions Emerge
Natural gas production remains stable at around 100.6 Bcf per day. Meanwhile, the National Weather Service (NWS) forecasts cooler weather across northern markets into early next week, potentially reducing short-term demand. Additionally, the remnants of Hurricane Debby are bringing heavy rain to the East Coast, which could further temper immediate energy consumption. However, an expected heatwave may offset these effects and drive demand higher in the near term.
Bargain Buying Lifts Prices After Recent Selloff
The recent uptick in natural gas futures has also been driven by bargain buying. After a period of selling pressure that pushed prices lower, traders are seizing the opportunity to buy at reduced levels. This has bolstered the market, helping it to recover from recent lows associated with concerns about a potential economic downturn.
Market Forecast: Bullish Momentum Likely to Persist
Given the current market conditions, the outlook for natural gas prices remains bullish. The combination of a smaller storage build, steady production, and renewed buying interest suggests that prices could continue to rise. Traders should monitor the $2.315 level as the next potential resistance point, with further gains possible if supportive factors remain in place.
