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US Natural Gas Update: Futures Rally Amid Bullish Storage Buildup, Lower Production

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-- US natural gas futures rose on Friday after a smaller-than-expected injection into storage, creating a bullish backdrop for domestic prices.

Both the front-month Henry Hub futures and the continuous contract rose 1.81% to $2.81 per million British thermal units. The benchmark was set to end the week up by 1%, according to TradingEconomics.

This comes following the Weekly Storage Report by the US Energy Information Administration, which showed a net injection of 63 billion cubic feet for the week ended May 1, bringing total inventories to 2,205 Bcf, which is 139 Bcf, or 7% higher than the five-year average for this period, and 75 Bcf, or 4% above the prior year.

The net injection, however, was below the prior week's 79 Bcf, last year's 105 Bcf, and the five-year average for this time of year of 77 Bcf. It also fell short of forecasts expecting an injection of 72 Bcf, according to data compiled by Investing.com.

Additionally, production in the Lower 48 edged lower as companies scaled back output amid lower spot prices, according to TradingEconomics.

US LNG feedgas to export facilities was estimated at 17.83 Bcf, significantly below the 30-day moving average of 19.19, according to the Bloomberg LNG Feedgas Model, amid routine, scheduled maintenance across certain key facilities.

Meanwhile, weather forecasts are pointing at above-normal temperatures across most of the country from May 15 to May 21, according to the National Weather Service, which should add to cooling demand.

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