Scott LaShelle July 2013
The Nymex Natural Gas July contact ended the week essentially holding its recent lows at 3.74 down about 7c for the day. After a very surprising storage report released by the EIA on June 6th, this week’s report was largely at expectations of a 95 bcf build, but further confirmed the bearish trend of reports showing weakness in gas demand of 3+ bcf per day on a year over year comparison. While Marcellus Shale production continues to grow, overall production in the lower 48 states is flat on a year over year basis.
The market’s weakness is being driven by lower gas fired power generation demand and relatively cools temperatures across the nation. That may be changing, as the National Weather Service’s short term forecasts show very warm temperatures in both Texas and the Ohio River valley over the next two weeks, and moderately warmer temps in the Mid-Atlantic and Northeast regions. We expect that the market will attempt to test the March lows in the low 3.60s before warmer weather kicks in.