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US Natural Gas Update: Futures Down Amid Forecasts of Bearish Storage Build, Declining Power Burn

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US natural gas futures were down on Thursday, ahead of the weekly storage report, which is expected to come in ahead of the five-year average for this period.

The front-month Henry Hub futures and the continuous contracts were both down 1.67% to $3.011 per million British thermal units.

The US Energy Information Administration's Weekly Gas Storage Report is expected to show a net injection of 86 billion cubic feet into storage, compared to the prior week's 63 Bcf and the five-year average for this period at 84 Bcf, making it a bullish build, according to data compiled by Investing.com.

Meanwhile, production has continued to slip, expected at 106 Bcf for Thursday, after starting the week strong at 107.6 Bcf, according to NRG Energy.

This, however, has been largely offset by a corresponding decline in power burn, by 1.6 Bcf per day compared to Wednesday.

At the same time, LNG feedgas flows to export facilities have declined, with estimates pointing to 17.51 Bcf on Thursday, compared to the 30-day moving average of 18.75 Bcf, according to the Bloomberg LNG Feedgas Model. This is due to the scheduled maintenance across several LNG export facilities.

According to Gary Cunningham of Tradition Energy, markets are also dealing with additional volatility stemming from low wind output in the ERCOT market.

Earlier in the week, there were periods when total wind output in ERCOT was under 5 gigawatts, and on Wednesday it almost completely shut off, Cunningham said, noting that output was under 2 GW, compared to the total installed capacity of 40 GW.

Besides this, almost the entire country is expected to experience above-normal temperatures from May 21 to May 27, according to the National Weather Service. Analysts expect this to result in increased power burn as additional air conditioner loads come online.

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