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US Natural Gas Update: Futures Fall on Larger-than-Expected Inventory Build

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US natural gas futures fell on Thursday, with front-month prices dropping to their lowest level in more than three months after government data showed a larger-than-expected increase in storage, reinforcing the perception of an amply supplied market.

The front-month Henry Hub contract and the continuous contract both fell 2.05% to settle at $2.633 per million British thermal units.

The US Energy Information Administration reported that working gas in storage increased by 33 billion cubic feet in the week ended July 31. The build exceeded market expectations for a 30 Bcf injection and was well above the five-year average increase of 23 Bcf for the period, underscoring a comfortable supply backdrop.

But losses were tempered by forecasts calling for warmer near-term weather across key US demand regions, which could lift natural gas consumption from power generators as air-conditioning use increases. Commodity Weather Group said forecast models shifted warmer on Thursday, with above-average temperatures expected across the Northeast and western US through Aug. 10.

Total lower-48 gas consumption was estimated at 83.2 Bcf/d on Thursday, up 7.5% from a year earlier. Celsius Energy said powerburn on Aug. 4 hit 45.8 Bcf, a 2.2 Bcf rise over the same day last year.

The market is also looking ahead to additional supply growth next month. Energy Transfer's Hugh Brinson Pipeline is expected to reach its full 1.5 Bcf/d capacity by Sept. 1, increasing the flow of Permian Basin natural gas to the Henry Hub pricing point in Erath, Louisiana.

Current production remains robust. Lower-48 dry gas output was estimated at 111.2 Bcf/d on Thursday, up 1.8% from a year earlier, Barchart, citing BNEF data, said. Separately, Trading Economics said Lower-48 production averaged a record 110.7 Bcf/d in July.

Meanwhile, net feedgas flows to US LNG export terminals were estimated at 18.5 Bcf/d on Thursday, remaining below full capacity because of scheduled maintenance at liquefaction facilities on the US Gulf Coast. However, LNG feedgas volumes were up 3.3% from the previous week.

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