EIA reports lower storage expansion than expected
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 an increase of 25-27 Bcf. The smaller-than-expected storage increase indicates a tightening of supply, which has supported the ongoing price recovery. Current storage levels are 3,270 Bcf, 248 Bcf more than the same time last year and 424 Bcf more than the five-year average.
Stable production despite cooler weather
Natural gas production remains steady at around 100.6 Bcf per day. Meanwhile, the National Weather Service (NWS) is forecasting cooler weather for northern markets through early next week, which could potentially reduce near-term demand. In addition, the remnants of Hurricane Debby are bringing heavy rains to the East Coast, which could further dampen immediate energy consumption. However, an expected heat wave could offset these effects and drive demand higher in the short term.
Bargain buying pushes prices up after recent sell-off
The recent rally in natural gas futures has also been driven by bargain buying. After a period of selling pressure that drove prices lower, traders are seizing the opportunity to buy at lower prices. This has buoyed the market and helped it recover from recent lows that were tied to concerns about a potential economic slowdown.
Market forecast: Bullish momentum likely to continue
Given current market conditions, the outlook for natural gas prices remains optimistic. The combination of lower inventory builds, stable production, and renewed buying interest suggests prices could continue to rise. Traders should keep an eye on the $2.315 level as the next potential resistance point, as further gains are possible if supportive factors remain in place.
