US natural gas futures declined further in midday trading on Wednesday, retreating from an eight-week high as strong production and bearish late September weather forecasts weighed on the market.
The front-month Henry Hub contract and the continuous contract both fell 3.12% to $2.826 per million British thermal units.
Prices fell as the market looked past bullish near-term weather forecasts and focused instead on cooler temperatures expected during the second half of this month.
Most of the forecasted warming was concentrated in the six- to 10-day period, while a significant cooling trend is expected in late September, Aegis Hedging said.
Current cooling demand remained firm, with powerburn above 50 billion cubic feet per day and LNG feedgas at 19.7 Bcf/d on Wednesday, according to Gelber & Associates.
However, forecasts for the second half of September point to falling temperatures, which are expected to reduce cooling demand, while scheduled maintenance at LNG plants is expected to curb feedgas consumption.
Feedgas flows to the nine major LNG export plants increased to 18.1 Bcf/d so far in September from 17.2 Bcf/d in August, Trading Economics said.
Total US natural gas demand is projected to rise to 111.0 Bcf/d on Wednesday, up 1.8 Bcf/d from the previous day and 7.5 Bcf/d above September 2025 levels, NRG Energy said.
Meanwhile, dry gas production slipped 0.3 Bcf/d to 109.5 Bcf/d but remained 1.6 Bcf/d above year-ago levels, keeping supply elevated despite the daily decline, NRG Energy said.
Market attention is now turning to Thursday's US Energy Information Administration weekly storage report.
Gelber & Associates expects a 34 Bcf injection for the week ended Sep. 4, compared with a 71 Bcf build during the same week last year. It said a storage build near that estimate would widen the year-on-year storage deficit to about 85 Bcf and reinforce the tightening storage trajectory driven by strong summer demand and LNG exports.
Despite the possibility of near-term tightening, EIA said Wednesday that US natural gas inventories are on track to remain above the five-year average at the start of winter.
The agency forecast inventories will reach 3,969 Bcf on Oct. 31, the end of the injection season, 5% above the five-year average.
Rising natural gas production in the Permian and Haynesville regions has supported inventory builds over the summer, the EIA said in its latest Short-Term Energy Outlook.