U.S. natural gas futures drifted lower on Thursday and headed for a monthly decline on rising production and a cooler weather view, while market participants awaited a federal weekly storage report due later in the day.

Front-month gas futures for September delivery on the New York Mercantile Exchange were down 0.9% at $3.019 per million British thermal units at 9:08 am EDT (13:08 GMT). Prices were down over 12% so far this month.

“We’ve been in a very hot pattern for most of July. However, we’re now seeing a dip in cooling degree days over the next five or so days. Secondly, production estimates are strong and LNG feed gas demand has been a bit rocky ,” Robert DiDona, president of Energy Ventures Analysis said.

“However, the market is fairly oversold. So, if anything bullish shows up, I think prices are going to find some support from technicals.”

LSEG said average gas output in the Lower 48 has risen to 107.5 billion cubic feet per day in July, surpassing the previous monthly record of 106.4 bcfd set in June.

It also projected average gas demand in the Lower 48 states, including exports, would fall from 113.0 bcfd this week to 108.0 bcfd next week.

Analysts at energy advisory firm Ritterbusch and Associates said in a note that further price decline in the September contract to the $2.85 level appears likely. They added that an additional down swing to as low as $2.50 cannot be ruled out if the second half of next month proves cooler than normal.

The U.S. Energy Information Administration is scheduled to release its weekly storage report at 10:30 a.m. EDT (1430 GMT). According to the average estimate of analysts in a Reuters poll, U.S. energy firms likely added an above-normal 37 billion cubic feet of natural gas into storage last week. That compares with an injection of 18 bcf during the same week a year ago and a five-year (2020-2024) average increase of 24 bcf for this time of year.
Source: Reuters