US natural gas futures edged higher in midday trade on Thursday after government data showed a smaller-than-expected increase in underground storage, reinforcing signs of tighter late-summer market balances.
The front-month Henry Hub contract and the continuous contract each rose 1% to $2.920 per million British thermal units.
US natural gas inventories rose by 44 billion cubic feet in the week ended Sept. 11, the Energy Information Administration said, below analysts' estimates for a 48-49 Bcf increase and well below the five-year average build of 74 Bcf for the week.
The injection was also substantially below the 90 Bcf increase recorded during the same week last year.
Working gas in storage stood at 3,298 Bcf, down 122 Bcf, or 3.6%, from year-earlier levels but 118 Bcf, or 3.7%, above the five-year average. A week earlier, inventories were 2.7% below year-ago levels and 4.8% above the five-year average.
Pinebrook Energy Advisors said Thursday's injection was the third consecutive weekly increase.
They noted that inventories, however, continued to lose ground against historical benchmarks. Storage inventories had been as much as 198 Bcf above the five-year average on Aug. 7, but that surplus has since narrowed to 118 Bcf.
The supply-demand balance is also providing additional near-term support for prices, Gelber & Associates said.
On the supply side, dry gas production ran at 112.5 Bcf per day, while Canadian imports recovered to 5.4 Bcf/d, partly offsetting recent softness in domestic production and keeping total supply near 117.9 Bcf/d.
Powerburn, or gas used for power generation, stood at 45.7 Bcf/d and LNG feedgas demand remained firm at 18.7 Bcf/d, it said.
Looking ahead, weather models point to cooler conditions and lower cooling demand beyond the next several days, with the largest revisions concentrated in the six- to 15-day period. Modeled total demand is expected to fall to 73.9 Bcf/d next week from 75.9 Bcf/d this week, Gelber said.