A cooler model run can change the demand picture quickly in September. Thursday’s price action above $3.00 said traders are paying for the heat in front of them. Thursday’s close below $2.92 said they are not paying much beyond that without another reason.
LNG Feedgas Near 19 Bcf and Europe Is Still Short
LNG feedgas to U.S. export terminals was estimated at 19.2 Bcf per day Thursday, down 1.7% from the prior week but still near the strongest levels of the year. Freeport is back from maintenance. Golden Pass is still ramping. The Gulf Coast is pulling gas for exports at the same time Texas power plants are burning it for cooling.
European gas storage was about 65% full at the end of August against a five-year seasonal average near 82%. The Strait of Hormuz remains disrupted. Qatar sends about 10% of Europe’s gas supply through that waterway. European buyers are not stepping away from U.S. cargoes with winter approaching and storage running that far behind.
Production at 114 Bcf and Rigs Still Climbing
Lower-48 dry gas production was estimated at 114.2 Bcf per day Thursday, up 5.6% from a year ago. Baker Hughes reported active gas rigs rose by five to 132, a five-month high sitting just below February’s three-year high of 134. Nobody is stepping back near $3.00.
The EIA raised its 2027 production forecast to 116.0 Bcf per day from 115.3 in July. The EIA also expects storage to reach 3,985 Bcf by the end of October, the highest in 10 years and about 5% above the five-year average. That forecast is the ceiling over every weather-driven rally. Thursday’s reversal from $3.026 was the market running into it.
What to Watch
The next weather runs and next Thursday’s storage report decide whether buyers get another shot above $3.00. The 30 Bcf build was below the five-year average and the heat is extending into mid-September. LNG feedgas is near 19 Bcf per day. European storage is running well below normal. The demand side has reasons to stay involved on pullbacks toward the 50-day.
The near-term read stays bullish while October futures hold above the 50-day moving average at $2.898. Thursday’s reversal from $3.026 stalled just short of the retracement zone at $3.044 to $3.133 and that zone is still the first real test above $3.00. Storage 5.2% above the five-year average, production at 114.2 Bcf per day and gas rigs near a three-year high are the reasons the market could not hold $3.00 Thursday. The 50-day decides whether this week’s breakout holds or turns into a failed move.
More Information in our Economic Calendar.
