-- US natural gas futures softened at midday on Friday, reversing earlier gains made following a smaller-than-expected storage build reported Thursday.
The front-month Henry Hub contract and the continuous futures contract both fell 0.47% to $2.756 per million British thermal units.
The move followed Thursday's rally after the US Energy Information Administration reported that natural gas inventories for the week ended May 1 increased by 63 billion cubic feet, below analyst expectations for an injection of 72 to 80 Bcf.
The market is currently balanced in the short term, though tighter conditions could emerge later in the month if LNG demand and cooling electricity consumption rise simultaneously, Gelber & Associates said.
On the supply side, US dry gas production rebounded by 0.7 Bcf/d day over day to 107.2 Bcf/d, which also marks a week-over-week increase of 0.7 Bcf/d, NRG Energy said.
Weather outlooks point to mixed regional demand drivers. NRG Energy noted the Northeast and Midwest are expected to remain cooler over the next couple of weeks before warming into mid-month. The West is forecast to stay very warm in the near term, before moderating as heat shifts eastward.
Export flows to LNG facilities remain below recent peaks due to ongoing maintenance and operational constraints at several terminals, including Corpus Christi, Cameron, and Calcasieu Pass. However, the Golden Pass facility continues to ramp up and has recently reached record output levels as commissioning progresses, according to Gelber & Associates.
Pipeline exports to Mexico remain strong at roughly 7.5 Bcf/d and are expected to increase further into mid-May as rising temperatures drive higher air-conditioning demand.