Commodities 2d ago
US Weekly Natural Gas Prices Decline on Bearish Storage Build, Milder Weather Outlook US natural gas prices ended the week lower amid higher-than-expected gas injections into storage, despite above-normal temperatures and record power burn.In the futures market, the Nymex front-month August contract fell to $2.95 per million British thermal unit, down from $3.22/MMBtu on July 3.Natural gas spot prices dropped by $0.02/MMBtu to $3.31/MMBtu during the week ended July 8, from $3.33/MMBtu the prior week, according to the US Energy Information Administration's Weekly Gas Storage Supplement, released Thursday.Prices were mixed across most major regional hubs, ranging from a decrease of $1.83/MMBtu at Algonquin Citygate to an increase of $1.48/MMBtu at SoCal Border-Ehrenberg.The Southwest saw the lowest prices in the country, despite seeing weekly increases, and even with Waha prices climbing to the highest sustained daily averages since the Winter Storm Fern earlier this year.US LNG feedgas flows retreated during the week, with averages dropping below 19 billion cubic feet, while still being above the 30-day moving average of 18.87 Bcf, according to the Bloomberg LNG Feedgas Model.The net injection into storage for the week ended July 03 was 61 Bcf, down from last week's 87 Bcf, bringing total gas inventories to 2,983 Bcf, according to EIA data.The net build came in slightly above forecasts, which expected 60 Bcf in net injection into working gas for the week. It was also above the prior year's figures at 53 Bcf, and the five-year average for this period, at 51 Bcf, according to data compiled by Investing.com.Reports were mixed across regions, with the Midwest reporting the highest net injection at 23 Bcf, followed by South Central and Nonsalt regions at 14 Bcf and 15 Bcf, respectively. The Salt region, however, reported a 1 Bcf withdrawal, amid high gas-fired power burn during the week.At 2,983 Bcf, US working gas inventories were 15 Bcf, or 1% below the corresponding period a year ago, while reporting a surplus of 185 Bcf, or 7% compared to the five-year average for this period.According to Pinebrook Energy Advisors, this storage build suggests "a looser supply/demand balance than the market had anticipated," while adding that going forward, the markets would remain focused on how temperature forecasts evolve for additional cues.Weather forecasts, which had pointed to above-normal temperatures across most of the country in recent weeks, are starting to turn, with the northwest set to see normal temperatures from July 17 to July 23, according to the National Weather Service.A total of 31 LNG carriers departed US ports during the week, down from 36 the previous week, with a combined capacity of 117 Bcf, 19 Bcf lower than a week earlier.In international markets, European TTF gas prices averaged $15.39/MMBtu for the week ended July 8, $1.36/MMBtu higher than the previous week. Meanwhile, the Japan-Korea Marker averaged $16.21/MMBtu, about $0.45/MMBtu above the prior week.The EIA's Short-Term Energy Outlook for July released Tuesday estimated natural gas consumption in the power sector to reach a record in 2027 as electricity demand continues to surge.The agency forecasts that natural gas use for power generation will increase by 2% in 2026 and by another 4% in 2027, to a record 38.1 Bcf per day. Monthly demand is expected to reach an all-time high of 50.6 Bcf/d in July 2027.Higher electricity demand, additional natural gas-fired generating capacity and relatively low natural gas prices will drive the increase, the EIA said.US gas-fired capacity is expected to reach 508 gigawatts by the end of 2027, up 3% from 2025.Summer natural gas demand for power generation is expected to average 42.2 Bcf/d this year, up 0.5 Bcf/d from summer 2025, and then rise to 46.3 Bcf/d in summer 2027.Renewable generation will supply much of the increase in electricity output, while gas plants will continue to meet peak demand, according to the EIA.The EIA expects total US natural gas consumption to increase by 3.1 Bcf/d from 2025 to 2027, with the electric power sector accounting for 2.3 Bcf/d, or 7% of the increase.Weather remains the biggest uncertainty, as hotter summer temperatures could further boost electricity demand.Record Permian production should keep natural gas inventories above the five-year average and limit price gains, the agency said.Working gas inventories are expected to reach 3,966 Bcf by the end of October, 5% above the five-year average.Above-average natural gas inventories heading into winter are expected to keep Henry Hub spot prices at $3.57/MMBtu in Q4 2026, down 5% from the same quarter a year earlier, the EIA said.Henry Hub natural gas spot prices are estimated to average at about $3.60/MMBtu over 2026 and 2027, analysts said."Adjusted for inflation, that price is about 10% below the average Henry Hub price from 2016 through 2025," according to the STEO.The agency expects stronger demand next year, narrowing the inventory surplus to 1% above the five-year average by the end of October 2027.Henry Hub prices are forecast to average $3.78/MMBtu in the Q4 of 2027, up 6% from a year earlier, while the full-year 2027 average is expected at just under $3.50/MMBtu, slightly below the nearly $3.60/MMBtu average projected for 2025 and 2026, according to the STEO.Meanwhile, the US gas rig count remained unchanged from the previous week at 126, in the week ending July 10, according to data from Baker Hughes (BKR) released Friday. That compares with 108 gas rigs in operation a year earlier.The consolidated North American oil and gas rig count, a key early indicator of future production levels, dropped by 10 to 760 from 770 the previous week.
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