U.S. natural gas futures fell more than 1% on Thursday on forecasts for less hot weather and lower demand over the next two weeks than previously projected.
Front-month gas futures NGc1 for September delivery on the New York Mercantile Exchange were down 2.9 cents, or about 1.4%, to $2.08 per million British thermal units at 10:45 a.m. EDT (1445 GMT).
That price decline came even though last week’s storage build was smaller than usual for this time of year. The U.S. Energy Information Administration (EIA) said utilities added 21 billion cubic feet (bcf) of gas into storage during the week ended Aug. 2.
That was lower than the 26-bcf build analysts forecast in a Reuters poll and compares with an injection of 25 bcf during the same week a year ago and a five-year (2019-2023) average increase of 38 bcf for this time of year.
Even though storage builds have been smaller than average in recent weeks, the amount of gas in storage was still around 15% higher than usual for this time of year.
“The market has been kind of drifting lower over the past month or so because of the lack of any kind of sustained significant hot weather across the country,” said Thomas Saal, senior vice president for energy at StoneX Financial.
“From a fundamental perspective you’ve got a high level of inventory which is bearish on the market but the injections are going in a weekly basis on the low side so that could be considered kind of bullish.”
Financial firm LSEG estimated 214 cooling degree days (CDDs) over the next two weeks, slightly lower from 220 CDDs estimated on Wednesday. The normal for this time of year is 189 CDDs.
Cooling degree days, used to estimate demand to cool homes and businesses, measure the number of degrees a day’s average temperature is above 65 degrees Fahrenheit (18 degrees Celsius).
If correct, that will leave gas stocks about 15% above normal for this time of year.
LSEG said gas output in the Lower 48 states had risen to an average of 103.4 billion cubic feet per day (bcfd) so far in August, up from 103.4 bcfd in July. That compares with a monthly record high of 105.5 bcfd in December 2023.
Major U.S. natural gas producers are preparing to further curtail production in the second half of 2024, after prices sank nearly 40% over the past two months.
Meanwhile, LSEG forecast average gas demand in the Lower 48 states, including exports, to rise to 109.7 bcfd this week from 105.8 bcfd last week, before declining to 104.1 bcfd next week.
Elsewhere, Dutch wholesale gas prices mostly edged higher on Thursday morning as continued concern over possible disruption to Russian supply via Ukraine provided support despite reduced demand from power plants owing to strong wind power output.
Source: Reuters (Reporting by Brijesh Patel and Rahul Paswan in Bengaluru; editing by David Evans and Emelia Sithole-Matarise)