US Natgas Prices Little Changed

US natural gas prices held around $2.77/MMBtu as traders balanced hotter weather forecasts against strong production and comfortable inventories. Forecasts turned warmer over the weekend, with above-average temperatures expected across Texas and much of the US through September 7, pointing to stronger demand for gas-fired electricity as air-conditioning use increases. August is also on track to become the hottest population-weighted August on record, according to Commodity Weather Group. On the supply side, output declined over the weekend, particularly in the Appalachian region, where low short-term prices have reduced production incentives. However, overall supply remains robust, with Lower 48 output averaging 111.5 bcfd in August, above July’s record of 110.7 bcfd. Inventories have remained above the five-year average since March, limiting the impact of stronger summer demand. Meanwhile, average gas flows to the nine major US LNG export facilities stood at about 17.1 bcfd.

US natural gas prices rose to around $2.77/MMBtu on Friday, extending gains for a second consecutive week as hotter weather forecasts boosted expectations for power-sector demand. Forecasts point to above-normal temperatures through September 4, prompting households to increase air-conditioning use and raising gas consumption by power generators. In Texas, the Electric Reliability Council of Texas expects daily peak electricity demand from Friday through Tuesday to exceed the previous record set in July. However, abundant supply continues to limit the upside. The latest EIA data showed utilities added 16 billion cubic feet to storage last week, below both the 19 bcf increase a year earlier and the five-year average of 29 bcf. Inventories nevertheless remain above seasonal norms, supported by record production and relatively mild weather earlier this year. Meanwhile, gas flows to the nine major US LNG export facilities averaged 17.2 bcfd in August, below June’s record.

US natural gas prices slipped to around $2.72 per million British thermal units on Thursday, retreating from a near four-week high as traders balanced expectations for continued hot weather against ample supply. The latest EIA data showed US utilities added just 16 billion cubic feet of gas to storage last week, below both the 19 bcf increase recorded during the same period last year and the five-year average of 29 bcf. Despite the smaller-than-usual injection, inventories remain above the seasonal norm, supported by record production and relatively mild weather earlier this year. Gas output has therefore remained strong enough to keep storage levels comfortable despite sustained summer heat. Meanwhile, average flows to the nine major US LNG export facilities were steady at 17.2 bcfd in August, slightly below June’s record of 17.4 bcfd. Looking ahead, forecasts point to predominantly warmer-than-normal conditions through September 3, which could support demand from power generators.