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US Natural Gas Update: Futures Prices Soften on Cooler Weather Shift

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US natural gas futures fell in midday trading on Monday, pressured by forecasts for milder weather later this month and subdued LNG feedgas demand.

The front-month Henry Hub contract and the continuous contract were down 3.03% at $3.131 per million British thermal units.

Weather forecasts remained the key driver for the market. NatGasWeather.com said national demand would be moderate early in the week, then rise through the remainder of the week and into next weekend.

"The weather data is quite hot this week and gets hotter at days 14-15, but the middle portion of the forecast is causing some selling today," NatGasWeather.com said.

Gelber & Associates said a softer weather outlook for the second half of June had eased concerns about cooling demand that supported last week's rally.

"The move looks more like a weather-led pullback than a full shift in the summer setup, but sellers have had more room to press with the market also focused on firm supply and LNG demand remaining soft due to maintenance," the firm said.

Gelber added that power burn remained the strongest source of demand support, estimating weekly consumption at 40 billion cubic feet per day, up 3.5 Bcf/d from the prior week, while the monthly average held at 40.5 Bcf/d.

On the supply side, NRG Energy said US gas production rose 1 Bcf/d from last week to 108.1 Bcf/d, though it remained below the record 111.5 Bcf/d reached in December. Gelber & Associates said Canadian imports were running near 5.1 Bcf/d.

According to Trading Economics, net flows to major LNG export terminals averaged 16.4 Bcf/d so far in June, down from 17.1 Bcf/d in May as seasonal maintenance constrained exports.

The US Energy Information Administration reported a 95 Bcf storage injection for the week ended May 29, narrowing the surplus to the five-year average to 5.7%. Working gas inventories stood at 2,578 Bcf, and NRG projected end-of-season stocks at about 3,960 Bcf.

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