FINWIRES · TerminalLIVE
FINWIRES

US Natural Gas Update: Futures Drop on Large Inventory Build

By

US natural gas futures fell sharply Thursday after government data showed a larger-than-expected increase in underground storage, although prices partially recovered by midday.

The front-month Henry Hub contract and continuous contract were both down 2.57% at $2.732 per million British thermal units.

The US Energy Information Administration said inventories rose by 36 billion cubic feet in the week ended Aug. 7, exceeding analysts' expectations for a 31 Bcf build.

Total natural gas in underground storage stood at 3,153 Bcf, the EIA said, 25 Bcf below year-earlier levels and 198 Bcf above the five-year average of 2,955 Bcf.

The larger-than-expected build pushed prices down to $2.712/MMBtu before quickly recovering to around $2.735/MMBtu.

In other supply news, Trading Economics said US natural gas production is averaging a record 111.2 Bcf per day so far in August, up from 110.7 Bcf/d in June.

Gelber & Associates put Thursday's production at 111.6 Bcf/d and Canadian imports at 5.7 Bcf/d, keeping supply more than sufficient against power-sector demand of 48.9 Bcf/d and LNG feedgas demand of 18.2 Bcf/d.

Near-term heat should keep power demand firm, while LNG feedgas demand is forecast to rise toward 19.9-20.3 Bcf/d over the next two weeks as export facilities ramp up, Gelber & Associates said.

Those demand supports could prevent the market from loosening sharply, but they now have to contend with a larger-than-expected storage build and forecasts calling for temperatures to ease closer to normal later this month, Gelber & Associates said.

"Until the market strings together cleaner evidence of tightening, rallies are likely to struggle under the combination of heavy production and a nearly 200 Bcf inventory surplus," Gelber & Associates said in a Thursday note.

Related Articles

Commodities

Market Chatter: Russia Taps India for Gasoline as Refinery Attacks Deepen Fuel Crunch

Russia has started importing gasoline from India for the first time as it faces severe shortages after repeated Ukrainian strikes on its refineries, according to a Bloomberg report on Tuesday.The first cargo arrived Aug. 5 and was supplied by Nayara Energy, the Rosneft-backed Indian refiner, and reached Russia via a roundabout route involving a ship-to-ship transfer off Egypt, Bloomberg said, citing Kpler data.For the inaugural shipment, the tanker was loaded with 42,000 metric tons of gasoline at India's Vadinar on June 18, according to Bloomberg-compiled data. This was then transferred to another tanker off Egypt's Damietta Port on July 6. It then reached Russia in early August, after almost two months in transit.Indian imports add to fuel already coming from Belarus, highlighting how tight Russia's domestic gasoline supply has become. Analysts estimate Russian refining rates fell about a third below normal in July, and Ukrainian strikes have only intensified since, prompting Moscow to restrict fuel exports to prioritize local demand.The Ministry of Energy of the Russian Federation, India's Ministry of Petroleum and Natural Gas, and Nayara's communications team did not immediately respond to' request for comment.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Commodities

US Natural Gas Update: Futures Gain on Warm Weather Ahead of Inventory Data

US natural gas futures maintained earlier gains in after-hours trade on Wednesday as warmer weather forecasts and strong LNG feedgas demand helped offset ample supplies as the market turned its focus to Thursday's Energy Information Administration storage report.The front-month Henry Hub contract and continuous contract were both up 0.94% at $2.793 per million British thermal units.Aegis Hedging said US temperatures had increased by about 3.2 degrees Fahrenheit over the forecast period, with modest warming expected in areas east of the Rockies. Power burn held at 49.1 billion cubic feet per day, while LNG feedgas demand rose to 18.6 Bcf/d, helping absorb much of the available supply and keeping the daily balance from becoming sharply loose.Aegis said Sabine Pass accounted for much of the increase in LNG feedgas demand, with flows rising by about 700 million cubic feet per day. A planned Creole Trail pipeline outage from Aug. 25-28 is expected to reduce gas flows to Sabine Pass by roughly 150 MMcf/d, while Freeport LNG is expected to return to normal operating rates in late August.US natural gas production remained elevated at 111.5 Bcf/d, while Canadian imports stood at 5.6 Bcf/d, putting total current supply at 117.2 Bcf/d, according to Gelber & Associates.Even stronger production is forecast. EIA said Wednesday that US natural gas output is expected to reach a record 122.5 Bcf/d in 2026, up from 118.5 Bcf/d in 2025. First-half production averaged 121.3 Bcf/d, up 4% from a year earlier, driven by growth in the Permian and Haynesville regions.Permian production is forecast at 29.2 Bcf/d, up 6%, with much of the increase coming from gas produced alongside crude oil.Market attention is now squarely on Thursday's EIA weekly storage report, with analysts expecting another sizable injection that could underscore the market's ample supply cushion.Barchart expects the EIA to report a 31 Bcf increase in US natural gas inventories for the week ended Aug. 7, slightly below the five-year average injection of 33 Bcf for the comparable week. Analysts polled by the Wall Street Journal see a 30 Bcf injection, which would narrow the inventory surplus over the five-year average to 192 Bcf from 195 Bcf.The expected injection comes as inventories already stand 6.7% above the five-year seasonal average. The EIA on Tuesday projected that US natural gas storage would reach 3,985 Bcf by the end of October, the highest end-October level in a decade and 5% above the five-year average.

Commodities

Alpha Compute Signs $55 Million Term Sheet for Pennsylvania Data Center Project

Alpha Compute Corp. entered a binding term sheet deal to acquire mineral, surface and pore-space assets in northern Pennsylvania and secure power and data center capacity for a planned campus, the company said in a Tuesday statement.The agreement gives Alpha Compute Management LLC, a company subsidiary, an exclusive option to acquire the assets for a base price of $55 million. A $3 million deposit would be payable after execution of a definitive property purchase agreement and satisfaction of specified conditions and would be credited toward the purchase price at closing.Alpha Compute, listed on NASDAQ under the ticker ALP, has a market capitalization of $4.48 million, according to CNN, classifying it as a micro-cap company.British Virgin Islands-based Alpha Compute said it would serve as the offtaker under a binding but conditional intra-company commitment for an initial 200 megawatts of planned power and data center capacity, with potential expansion to 1 gigawatt.The counterparty names were not disclosed, and Alpha Compute said the project remains subject to due diligence, permitting, financing, and definitive agreements.The assets include about 1,800 unleased Marcellus oil and gas mineral acres, with a 100% net revenue interest subject to title confirmation, as well as surface and pore-space properties. Existing leasehold rights in the Utica and deeper formations are excluded.The project is greenfield, with no operating power or data center capacity currently at the site. Alpha Compute said it plans to pursue development using non-dilutive capital through special-purpose vehicles and joint ventures with energy and development partners.A third-party evaluation estimated that gas produced from the Marcellus could support 200 MW of continuous generation for 10 years at an all-in delivered cost of about 5.85 cents per kilowatt-hour, below estimated PJM commercial and industrial rates of 8 cents to 10 cents.Development plans call for 12 Marcellus wells, with average laterals of about 13,000 feet, and two new well pads. Nearby interstate gas pipelines and existing electric infrastructure could support future expansion, subject to commercial arrangements and approvals.