US natural gas prices ended another week lower on Friday, despite the lower-than-expected gas injection into storage, amid milder weather forecasts and low LNG feedgas flows.
In the futures market, the Nymex front-month August contract fell to $2.916 per million British thermal unit, down from $3.212/MMBtu on July 10.
Natural gas spot prices dropped by $0.51/MMBtu to $2.80/MMBtu during the week ended July 15, from $3.31/MMBtu the prior week, according to the US Energy Information Administration's Weekly Gas Storage Supplement, released Thursday.
Prices were mixed across major regional hubs during the week, ranging from a decrease of $0.54/MMBtu at Florida Gas Zone 3 to an increase of $0.65/MMBtu at the Northwest Sumas border crossing with Canada.
The western regions saw a surge in prices, with average daily temperatures soaring by 4 degrees Fahrenheit, resulting in 71 more cooling days than the prior week. As a result, PG&E (PCG) Citygate rose $0.48/MMBtu over the past week to $2.55/MMBtu on July 15.
The Pacific region similarly reported a 16% surge in natural gas consumption this week, to 0.8 billion cubic feet per day, driven by a 44% increase in the power sector.
US LNG feedgas flows retreated during the week, with averages dropping below 18 billion cubic feet and the 30-day moving average of 18.60 Bcf, according to the Bloomberg LNG Feedgas Model. This was primarily due to the Freeport LNG terminal in Texas entering into a major planned maintenance starting July 10, which is set to last until late August.
The net injection into storage for the week ended July 10 was 41 Bcf, down from last week's 61 Bcf, bringing total gas inventories to 3,024 Bcf, according to EIA data.
Storage injections came in below forecasts, which had expected a 45 Bcf net injection into working gas for the week. It was also below the prior year's figures at 47 Bcf and the five-year average for this period, at 45 Bcf, according to data compiled by Investing.com.
Most regions reported net injections during the week, with the Midwest and East reporting the highest inflows at 20 Bcf and 14 Bcf, respectively.
Inventories across the Mountain and Pacific regions were 21% and 22% above their respective five-year averages, despite high consumption during the quarter.
At 3,024 Bcf, US working gas inventories were 21 Bcf, or 1%, below the corresponding period a year ago, while reporting a surplus of 181 Bcf, or 6%, compared to the five-year average for this period.
According to Pinebrook Energy Advisors, this storage build suggests a tightening driven by "stronger natural gas-fired generation as wind output dropped sharply," which helped offset the impact of milder-than-expected temperatures.
Weather forecasts have continued to turn bearish over the past week, with most of the northeast set to experience average temperatures, and some regions below-average temperatures from July 24 to July 30, according to the National Weather Service.
A total of 34 LNG carriers departed US ports during the week, up from 31 the previous week, with a combined capacity of 131 Bcf, 14 Bcf higher than a week earlier.
Meanwhile, the US gas rig count remained unchanged at 126 in the week ending July 17, according to data from Baker Hughes (BKR) released Friday. That compares with 117 gas rigs in operation in the US a year earlier.
The consolidated North American oil and gas rig count, a key early indicator of future production levels, increased by 26 to 786 from 760 the previous week.
In international markets, European TTF gas prices averaged $17.24/MMBtu for the week ended July 15, $1.85/MMBtu higher than the previous week. Meanwhile, the Japan-Korea Marker averaged $16.62/MMBtu, about $0.41/MMBtu above the prior week.