Pure Fuel Information: Bearish Forecast Builds as Storage and Output Outpace Demand…

EIA Storage Report Indicators Oversupply Threat

The EIA reported a +48 Bcf injection for the week ending July 25—nicely above each the +41 Bcf consensus and the 5-year common of +24 Bcf. Inventories are actually 6.7% above the 5-year norm, regardless of being three.9% decrease year-over-year. U.S. provide is clearly snug heading into peak summer time burn, limiting upside potential for costs within the close to time period.

Manufacturing, Rig Counts and Demand Developments Ship Bearish Indicators

Manufacturing stays relentless. Decrease-48 dry fuel output hit 108.1 Bcf/day on Friday, up three.four% y/y, whereas demand sagged to 76.1 Bcf/day, a pointy 13% decline y/y. Baker Hughes confirmed rising exercise, with the U.S. fuel rig depend rising by 2 to 124—marking a brand new 2-year excessive and increasing a 10-month climb from final yr’s lows.

LNG exports are holding regular, with flows to U.S. terminals at 15.2 Bcf/day (+2.three% w/w), however they’re not absorbing sufficient extra to tighten balances meaningfully. Europe’s fuel storage ranges—simply 68% full versus a 5-year common of 76%—would possibly restrict short-term U.S. export upside as nicely.

Energy Demand Rebounds however Lags Behind Provide Tempo

Electrical energy technology is climbing. The Edison Electrical Institute reported an eight.1% y/y improve in complete U.S. output for the week ending July 26, hitting 98,772 GWh. This provides some tailwind for fuel demand, significantly from utilities. Nonetheless, it hasn’t been sufficient to counterbalance the manufacturing and storage surplus dragging the front-month decrease.

Bearish Outlook as $2.574 Help Comes into View