Friday, August 31, 2012

Natural gas futures outlook 8/31/2012

Natural gas futures forecast 8/31/2012 : Natural-gas futures prices settled at a one-week high Thursday as forecasts for above-normal late summer weather eclipsed news of a bigger-than-expected rise in last week's gas storage level.

October natural gas futures on the New York Mercantile Exchange rose 6.3 cents, or 2.4%, to settle at $2.748 per million British thermal units. The rise was the biggest since Aug. 14 and it put prices at the highest settlement level in a week.

Gas storage rose by 66 billion cubic feet in the week ended Aug. 24, to 3.374 trillion cubic feet--a record high for this time of year and a level that wasn't touched in 2011 until the end of September. Stocks are 14.6% above a year ago, and 12% above the five-year average, the Energy Information Administration reported.

The increase topped analysts' expectations for a rise of 62 billion cubic feet and exceeded historical gains for the week. Last year, stocks rose by 60 bcf, while the average rise in the week over the previous five years was 62 bcf.

But traders put more focus on forecasts for hot weather in the near-term, which will likely boost gas demand by power utilities. The late-summer demand jump comes as Gulf gas production has been curtailed by precautionary shutdowns ahead of Hurricane Isaac's move through the region.

Government data show some 73% of U.S. Gulf natural gas output, or 3.3 billion cubic feet per day, was shut in as of Thursday, as Hurricane Isaac moved through the region.

Facilities are expected to be brought back on line quickly after inspections in coming days, if no damage is discovered. Gulf gas output accounts for just about 5% of U.S. supply, down from about 15% in 2005, amid the growth in onshore shale gas output.

Still, the shut-in volumes and higher demand could mean a sharply reduced increase in gas storage in next week's report.

MDA EarthSat Weather sees above-normal temperatures across much of the U.S. through Sept. 3, except for the parts of the northwest and southwest, where normal temperatures are expected. Parts of the Midwest and upper-Midwest can expect much-above-normal temperatures through the Labor Day holiday Monday. But that will be followed by normal Midwest temperatures, which will stretch to the East Coast by mid-month, when temperatures in the Deep South drop to below normal, the forecasters said.

We have some warmer-than-normal weather on the docket for next week, enough to keep the shorts at bay for the weekend, referring to investors who were looking to sell the market in anticipation of lower near-term prices.

"There's plenty of areas out there like Texas which will burn a lot of gas over the next two weeks as temps stay aloft of 90" degrees Fahrenheit

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