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US Natural Gas Update: Futures Flat on Strong Production, Healthy Inventories

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US natural gas futures were essentially flat in after-hours trading on Friday, as strong production and healthy inventories limited gains despite late-summer heat supporting demand.

The front-month Henry Hub contract and the continuous contract both edged down by a modest 0.07% to $2.899 per million British thermal units.

Fundamentals remained broadly balanced as late-summer heat across much of the US supported demand, while cooling needs were expected to fade ahead of autumn.

"Pervasive warmer-than-normal weather has kept generation load elevated, but record production and generally healthy storage inventories continue to keep a lid on pricing," Pinebrook Energy Advisors said.

Celsius Energy said power burn for the week ended Sept. 17 was 42.7 billion cubic feet per day, up 2.3 Bcf/d from the same week a year earlier, underscoring the impact of above-average temperatures across much of the country in mid-September.

Looking ahead, the Commodity Weather Group said Friday that forecasts had shifted cooler, with above-average temperatures now expected to cover a smaller portion of the South and Southeast from Sept. 23 to Oct. 2. The shift reduced estimates for early autumn air-conditioning demand.

LNG exports continued to support demand. Estimated net gas flows to US LNG export terminals remained strong at 19.2 Bcf/d on Friday, up 0.7% from a week earlier.

The US Energy Information Administration said LNG-carrying capacity on the 36 vessels that departed US ports during the week ended Sept. 16 was 138 Bcf, up 1 Bcf from the previous week. The number of tankers was unchanged.

Total Lower 48 state gas demand was 75.7 Bcf/d on Friday, down 0.6% from a year earlier, Barchart said, citing BNEF data.

On the supply side, US Lower 48 dry gas production was 113.8 Bcf/d on Friday, up 4.9% from a year earlier.

The EIA's weekly report on Thursday was supportive of natural gas prices, showing a 44 Bcf increase in US natural gas inventories for the week ended Sept. 11. The build was below expectations for around a 48 Bcf increase and the five-year weekly average of 74 Bcf.

Natural gas inventories were down 3.9% from a year earlier but remained 3.7% above the five-year seasonal average, indicating adequate supplies.

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US Natural Gas Update: Prices Fall as Demand Outlook Weighs on Storage Bullishness

US natural gas prices softened in after-hours trading Thursday as a cooler weather outlook for late September outweighed bullish sentiment from a smaller-than-expected weekly storage build.The front-month Henry Hub contract and the continuous contract each fell 0.76% to $2.869 per million British thermal units.The approach of autumn is weighing on prices as cooling demand is expected to fade beginning next week. Barchart, citing Commodity Weather Group forecasts, said Thursday that the outlook had shifted cooler, with above-average temperatures expected to cover a smaller portion of the South and Southeast from Sept. 22 through Oct. 1.The cooler outlook offset some of the support provided by the Energy Information Administration's weekly storage report. US natural gas inventories rose by 44 billion cubic feet in the week ended Sept. 11, the EIA said Thursday, below analysts' estimates for a build of 48 Bcf to 49 Bcf and well below the five-year average increase of 74 Bcf for the week.The injection was also substantially below the 90 Bcf build 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 storage builds have increased in recent weeks but remain lighter than normal for this time of year, steadily eroding the storage cushion accumulated earlier in the summer.That tightening backdrop has provided underlying support to the market even as power-generation demand begins to ease, the advisory firm said.Late-season heat has limited storage injections by driving demand from the power sector. Despite temperatures remaining above normal, they are trending lower as the season advances, The Wall Street Journal reported, citing Andy Huenefeld of Pinebrook Energy Advisors.Huenefeld said the trend points to stronger storage builds in the coming weeks before more significant heating demand emerges in October.US Lower 48 dry-gas production was 113.2 Bcf/d Thursday, up 5.0% from a year earlier, according to BNEF. Lower 48 gas demand was 77.0 Bcf/d, up 3.8% year over year.Estimated LNG net flows to US export terminals were 18.7 Bcf/d, down 4.1% from the previous week, BNEF data showed.Market sentiment had received a boost Wednesday after the Edison Electric Institute reported that US Lower 48 electricity output in the week ended Sept. 12 rose 16.1% from a year earlier to 94,427 gigawatt-hours.Electricity output over the 52 weeks ended Sept. 12 rose 3.3% year over year to 4,405,549 GWh.