US natural gas futures fell in midday trading on Wednesday, pressured by softer crude prices and signs of easing cooling demand as the market looks ahead to the seasonal transition.
The front-month Henry Hub contract and the continuous contract both fell 0.92% to $2.893 per million British thermal units.
US natural gas production was at a two-week low of 111.8 billion cubic feet per day, while Canadian imports remained subdued at 4.7 Bcf/d, limiting total supply despite production continuing to run near record levels, Gelber & Associates said.
Despite the dip in output, fundamentals remained indicative of a well-supplied market, NRG said, with Lower 48 production holding relatively steady. Trading Economics said output averaged a record 111.5 Bcf/d in August, up from 110.7 Bcf/d in July.
At the same time, demand was also showing signs of softening. Power-sector gas burn was pegged at 44.8 Bcf/d, while LNG feedgas demand fell to a two-week low of 18.5 Bcf/d, Gelber said.
Temperatures remain warm enough to support near-term cooling demand, but forecasts point to a more pronounced decline later this month as the shoulder season takes hold, Trading Economics said.
NatGasWeather said most of the southern two-thirds of the US would see warm to hot conditions, with highs in the 80s to 100 degrees Fahrenheit, while the remaining third would see cooling temperatures.
Overall demand is expected to remain high over the next five days before easing to lighter levels, it said.
Market attention is turning to the US Energy Information Administration's weekly natural gas storage report, due Thursday.
Gelber & Associates forecasts a 47 Bcf injection for the week ended Sept. 11, well below the 90 Bcf build reported during the corresponding week last year.
Persistent late-season power demand and LNG feedgas averaging near 19.5 Bcf/d during the storage week helped drive a 43 Bcf year-over-year tightening in the inventory balance, Gelber said, despite production remaining near historic highs during the reporting period.