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US Natural Gas Update: Futures Edge Up Amid Steady Fundamentals

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Natural gas futures edged higher in after-hours trading on Monday as traders weighed shifting US weather forecasts against largely steady supply-and-demand fundamentals.

The front-month Henry Hub contract and the continuous contract each rose 0.98% to $2.774 per million British thermal units.

Natural gas futures were slowly recovering from a low of $2.666 hit last Wednesday as a stretch of below-normal US temperatures reduced air-conditioning demand, allowing inventories to rebuild, Barchart said.

Monday's price gains were limited after forecasts again turned cooler, potentially curbing demand from power generators for air conditioning. The Commodity Weather Group said Monday that forecasts had shifted cooler, with near-normal seasonal weather expected across the eastern US through Aug. 17.

However, NatGasWeather.com said its data continued to point to a much warmer outlook. "The weather data remains quite hot for the 3-15 day forecast period for strong to very strong national demand," the forecaster said. It added that the National Oceanic and Atmospheric Administration's 8-14-day outlook showed above-normal temperatures across most of the US, with the exception of areas near the Canadian border.

Fundamentals remained relatively stable on Monday. US lower-48 dry gas production was quite a strong 112.5 billion cubic feet per day, down 0.2 Bcf/d from Friday but up 2.6% from a year earlier, Barchart said, citing BNEF data.

Lower-48 gas demand totaled 78.7 Bcf/d, down 1.4 Bcf/d from Friday but 14.7% higher than a year ago. Celsius Energy estimated power-sector gas burn at 45.0 Bcf on Aug. 1, down 1.6 Bcf from the previous day but 0.2 Bcf higher than on the same day last year. Average power burn for the week ended Aug. 1 was 46.9 Bcf/d, down 2.4 Bcf/d from the corresponding week a year earlier.

Estimated net flows to US LNG export terminals were 18.0 Bcf/d on Monday, up 0.1 Bcf/d from Friday but down 0.8% from Friday. LNG feedgas was flowing below capacity due to maintenance at Freeport LNG, which was expected to keep demand reduced until the end of the month.

The latest weekly government storage data showed natural gas inventories were at a very comfortable 6.4% above the five-year average but remained 1.2% below year-earlier levels.

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