US Natgas Prices Fall to 3-Week Low

US natural gas prices fell below $2.78/MMBtu, reaching a three-week low after the EIA reported a larger-than-expected storage build. Utilities added 40 billion cubic feet to inventories in the week ending September 4, above expectations for a 31-bcf increase and lifting total stocks to 3.254 trillion cubic feet. Inventories are 4.8% above the five-year average, reinforcing concerns over ample supply. Production has also remained strong, with Lower 48 output averaging 112.9 bcfd so far in September, above August’s monthly high. These factors have outweighed support from robust demand. Above-average temperatures across the South and Southeast are expected to sustain air-conditioning demand, while gas deliveries to major LNG export facilities have increased. Rising European and Asian demand for US LNG, as buyers seek alternatives to disrupted Middle Eastern supplies and prepare for winter, is providing additional underlying support to the market.

US natural gas prices fell below $2.80/MMBtu, extending their retreat from an eight-week high, as abundant domestic supplies and solid production weighed on the market. US gas inventories were 5.2% above the five-year seasonal average as of August 28, while output across the Lower 48 rose to 112.9 bcfd so far in September from August’s monthly high of 112.2 bcfd, reinforcing the supply overhang. These supply-side factors offset support from stronger demand. Forecasts for above-average temperatures expected across the South and Southeast through September 18 are expected to keep air-conditioning demand elevated, supporting natural gas consumption in the power sector. At the same time, gas flows to the nine major LNG export plants increased to 18.1 bcfd in September from 17.2 bcfd in August. Demand for US LNG from Europe and Asia has also risen sharply as buyers seek to replace disrupted Middle Eastern supplies and replenish inventories ahead of the winter heating season.

US natural gas prices remained above $2.90/MMBtu, not far from two-month highs, as traders balanced stronger cooling demand and rising LNG exports against plentiful domestic supplies. Persistent heat across the continental US continued to boost air-conditioning demand, supporting gas consumption in the power sector. Meanwhile, average feedgas flows to the nine major LNG export facilities climbed to 18.3 bcfd in early September from 17.2 bcfd in August, as facilities in Texas returned to full operations after maintenance. Export demand also strengthened in Europe and Asia, where buyers are replenishing inventories ahead of the winter heating season amid ongoing disruptions to LNG supplies from the Persian Gulf. However, high domestic production and comfortable storage levels limit further price gains. US gas inventories stood 5.2% above the five-year seasonal average as of August 28, while output across the Lower 48 remained close to record levels, keeping the market well supplied.