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The Weekly Natural Gas Market Newsletter August 2, 2021

The August 2021 NYMEX natural gas future's contract expired Wednesday at $4.044 after a few volatile days of trading. The contract roared out of the gate and gapped open on Monday morning reaching an intra-day high of $4.187. However, revised weather outlooks calling for cooler than normal weather for the 1st week of August for Texas, the South and parts of the Mid-Atlantic region, pressured the contract to a low of $3.874 on Tuesday. The contract rebounded on Wednesday heading into its expiration. The September contract now takes over as the prompt month contract.

For the week ending 7/23, the EIA reported an injection of 36 BCF into natural gas storage. The injection was smaller than most market analyst's expectations of 42 BCF injection. Current natural gas inventory levels now stand 16.2% below year ago levels and 5.8% below the previous 5-year average.

Despite a slightly cool first few days of August, heat is expected to return to most regions by week's end. Cooling demand from power generation along with very steady demand from LNG exports and pipeline exports to Mexico are coupled with production levels that remain flat. This fundamental scenario is still causing many traders to worry about storage levels heading into next winter.

The September contract is likely to test near-term price resistance at $4.18-4.20 and then possible at $4.50 and then at $4.80. Support is seen at $3.84, $3.67 and then at $3.49. Open needs for September should be purchased on any dips that might be seen in the coming weeks.