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Natural Gas Rangebound as WTI Rises on Stronger US Exports, Refinery Runs, EBW Says

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US natural gas prices remained range-bound ahead of September contract expiry, while crude oil prices moved higher as US exports and refinery runs strengthened, EBW Analytics said in a Monday note.

The September natural gas contract traded between $2.638 per million British thermal units on Aug. 17 and $2.875 on Aug. 19 before settling 4 cents higher on the week. Winter contracts extended their declines.

Near-term trading is expected to center on the September options expiry on Wednesday and final settlement on Thursday.

Hot Texas weather, recovering liquefied natural gas demand and widening storage deficits over the year could support a moderate seasonal recovery.

Weather forecasts added three cooling degree days over the weekend, concentrated in early September, although seasonal cooling demand is still expected to weaken.

EBW projects power-sector gas demand could fall 3.9 billion cubic feet per day between the first and third weeks of the period.

LNG feedgas demand remained soft due to weakness at Corpus Christi and ongoing Freeport maintenance, but could recover by 1.5 Bcf/d over the next week to 10 days.

Production also declined from record levels, while weak Marcellus prices near $1.50/MMBtu could encourage additional producer curtailments.

EBW said natural gas has a medium-term upside bias if supply growth disappoints, with storage surpluses potentially shrinking toward 135 Bcf above five-year norms by mid-September.

However, elevated inventories, production capable of rebounding quickly and risks of exceptionally mild winter weather could produce renewed weakness later in the year.

In electricity markets, national loads eased, although Texas heat and weaker wind output supported gas-fired generation.

ERCOT day-ahead prices doubled to $57.49 per megawatt-hour Friday as strong demand coincided with weak wind, while PJM West prices fell nearly by half to $45.09/MWh.

WTI rose into September expiry as tensions between the US and Iran tightened crude supplies available to China.

US refinery runs reached 17.4 million barrels per day, the highest since September 2019, while diesel crack spreads exceeded $100 per barrel. US crude exports also reached an eight-week high of 4.1 million b/d.

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