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US Natural Gas Update: Futures Dive After Large Inventory Build

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US natural gas futures extended losses in midday trading Thursday after a larger-than-expected storage build deepened bearish market sentiment.

The front-month Henry Hub contract and the continuous contract both fell 6.29% to $3.01 per million British thermal units.

The US Energy Information Administration reported Thursday that natural gas inventories increased by 61 billion cubic feet for the week ended July 3. The build lifted total stocks to 2,983 Bcf and widened the surplus above the five-year average to 185 Bcf, up from 175 Bcf the previous week.

The latest inventory level was 15 Bcf below the same period a year earlier.

The 61 Bcf injection exceeded the five-year average build of 51 Bcf for this time of year and surpassed many analysts' expectations, which ranged from 51 Bcf to 57 Bcf.

Meanwhile, US natural gas production remains robust despite easing from last month's levels. Output in the Lower 48 states averaged 109.4 Bcf per day in July so far, down from 110 Bcf/d in June, according to Trading Economics.

Prices were also pressured by reduced feedgas flows to LNG export facilities as maintenance activity weighed on demand.

Maintenance at Freeport LNG is scheduled to begin on July 10, raising concerns over a temporary decline in feedgas demand, Trading Economics said. Natural Gas Intelligence also reported that compressor maintenance was underway at Cheniere Energy's (LNG) Sabine Pass LNG terminal.

LNG export feedgas flows were estimated at 18.98 Bcf on Thursday, according to the Bloomberg LNG Feedgas Model.

Price: $260.80, Change: $-0.14, Percent Change: -0.06%

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