US Natgas Prices Drop Further

US natural gas prices fell to $2.87/MMBtu on Monday, extending their retreat from a five-week high as traders weighed the prospect of increased supply. Energy Transfer LP’s Hugh Brinson Pipeline in Texas is set to begin service on September 1 and will eventually be able to transport about 2.2 Bcf/d of natural gas from the Permian Basin to East Texas, which may increase domestic gas supplies in Erath, Louisiana. On top of that, output in the Lower 48 states averaged a record 111.4 bcfd so far in August, up from 110.7 bcfd in July. However, losses were capped by forecasts for warmer weather, with the Commodity Weather Group saying on Friday that above-average temperatures are expected across the eastern two-thirds of the US from September 2-11, keeping cooling demand elevated. Meanwhile, data showed gas demand from LNG export plants improved, as Cheniere Energy’s Corpus Christi facility and Freeport LNG in Texas resumed operations after maintenance.

US natural gas prices held around $2.9/MMBtu, the highest level in five weeks, supported by a smaller-than-usual storage injection and forecasts for continued warm weather. EIA data showed that energy firms added 15 Bcf of gas to storage for the week ended August 21, below the 20 Bcf forecast and the 33 Bcf five-year average for the period. Gas prices also gained amid forecasts of record-high temperatures across the Southwest through this weekend, while the Commodity Weather Group said on Thursday that above-average temperatures are expected across nearly the entire US from September 1-10, keeping cooling demand elevated. However, strong domestic production is capping further price gains, with output in the Lower 48 states averaging a record 111.4 bcfd so far in August, up from 110.7 bcfd in July. Meanwhile, average gas flows to the nine major LNG export facilities fell slightly to 17.1 bcfd from 17.2 bcfd in July, although LNG demand is showing signs of recovery.

US natural gas prices climbed above $2.90/MMBtu, reaching their highest level in five weeks, after the latest EIA data showed a smaller-than-expected increase in storage. Utilities added just 15 billion cubic feet of gas last week, below the 20 bcf forecast and well under the 33 bcf five-year average for the period. Expectations of persistent hot weather also supported prices, with above-normal temperatures forecast across much of the eastern US from August 31 through September 4. The heat is likely to sustain demand from power generators as air-conditioning use remains elevated. However, strong domestic production continues to limit the upside. Output in the Lower 48 states averaged a record 111.4 bcfd in August, up from 110.7 bcfd in July. Meanwhile, average gas flows to the nine major US LNG export terminals eased slightly to 17.1 bcfd this month from 17.2 bcfd in July, although signs of recovering LNG demand are emerging.