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Despite a forecast for hot temperatures the first week of July, gains were limited and prices retreated due to reports of strong production. The price action in the spot market suggests traders in the hot regions saw the heat coming and are well-supplied. Potentially pressuring prices were forecasts on Friday which showed heat in the short- and medium-term easing off by mid-July.
Natural gas futures closed lower last week, pressured by forecasts for cooler temperatures and a two-sided government weekly storage report. The price action indicates hedgers are defending the $3.040 to $3.050. It also suggests that prices could collapse if a key technical level at $2.885 is taken out with conviction.
August Natural Gas settled at $2.924, down $0.021 or -0.71%.
On Thursday, the U.S. Energy Information Administration said that domestic supplies of natural gas rose by 66 billion cubic feet for the week-ended June 22. Traders were looking for an increase of 71 billion cubic feet.
The data, however, included an upward revision for the week-ending June 15. The previously reported figure was 91 Bcf. The revised figure was 95 Bcf.
Total stocks now stand at 2.074 trillion cubic feet, down 735 billion cubic feet from a year ago, and 501 billion below the five-year average, the government said.
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