Working gas in storage as of May 25 was 1,725 Bcf, compared to 2,513 Bcf a year ago and the five-year average inventories of 2,225 Bcf, according to EIA data. Compared to the prior week, the year-on-year storage deficit shrank from 804 Bcf to 788 Bcf, and the year-on-five-year deficit increased slightly from 499 Bcf to 500 Bcf. The lower inventory levels either indicate heightened demand or diminished supply, which are both bullish for natural gas prices.
For the mid-term outlook, some traders seem bullish due to concerns over stronger cooling demand to combat the summer heat while the market suffers from a storage deficit. Over the short-term, however, traders are watching next week’s weather forecast, which appears neutral to bearish at this time.
“This weekend into early next week will bring areas of showers across the northern U.S. with highs of 70s and 80s, while very warm to hot over Texas, the South, and SW,” according to Natgasweather.com.
For more information on the natgas market, visit our natural gas category.