US natural gas prices fell in midday trade on Tuesday as cooler late-September forecasts and upcoming LNG maintenance tempered the market outlook, offsetting near-term heat forecasts.
The front-month Henry Hub contract and the continuous contract both declined 2.99% to $2.886 per million British thermal units.
Near-term temperatures are expected to remain warm enough to support respectable cooling demand for several more days, but the 11-15 day outlook points to noticeably cooler weather as September progresses, shifting market attention away from a post-holiday rebound in power demand, Gelber & Associates said Tuesday.
Aegis Hedging said the initial forecast for Sept. 19-22 is significantly cooler than current conditions. Aegis said lower 48-hour average temperatures are expected to fall to about 70 degrees Fahrenheit in late September, from nearly 80 degrees on Wednesday, citing Criterion. An earlier start to the shoulder season could boost storage levels heading into the withdrawal season, it said.
While fading cooling demand weighed on the market, renewed demand for LNG feedgas provided near-term support. LNG feedgas demand rose to 19.7 Bcf/d ahead of several shoulder-season maintenance events, Aegis said.
However, feedgas demand is expected to decline by roughly 0.4-0.6 Bcf/d over the next two months as shoulder-season maintenance takes place, Aegis said. Cove Point liquefaction maintenance is scheduled to run for 23 days from late September into early October and will account for most of the expected demand reduction.
On the supply side, US production was still strong and pegged at 112.5 Bcf/d and Canadian imports fell to 4.6 Bcf/d on Tuesday, according to Gelber, leaving the supply side a bit tighter than last week.
US natural gas inventories stood at 3,214 Bcf, down 50 Bcf, or 1.8%, from the same period last year but 160 Bcf, or 5.2%, above the five-year average, the US Energy Information Administration said in its latest weekly report.