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US Natural Gas Update: Futures Rise on Smaller Storage Build, Hot Weather Forecasts

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US natural gas futures rose in midday trading on Thursday after government data showed a smaller-than-expected storage build, while forecasts for hotter weather across much of the country through early September provided additional support.

The October Henry Hub contract rose 2.68% to $2.952 per million British thermal units, while the continuous contract gained 2.71% to $2.951/MMBtu.

The US Energy Information Administration reported a 15 billion-cubic-foot increase in gas inventories for the week ended Aug. 21, compared with analyst estimates for a build of 15 Bcf to 27 Bcf. Stocks stood at 3,184 Bcf, 30 Bcf below year-earlier levels but 167 Bcf above the five-year average.

Gelber & Associates said the small build confirmed that "late summer heat and strong export demand have been steadily tightening the storage trajectory."

Hot weather was also supporting prices, with above-normal temperatures forecast across much of the eastern US from Aug. 31 through Sept. 4, according to Trading Economics.

The heat is likely to sustain demand from power generators as air-conditioning use remains elevated. Gelber said Thursday's US power burn remained elevated at 48.6 Bcf per day.

Strong domestic production, however, continued to limit upside, as supplies were generally deemed plentiful.

Lower 48 output averaged a record 111.4 Bcf/d in August, up from 110.7 Bcf/d in July, Trading Economics said. Gelber pegged Thursday's production levels at a two-week low of 111.4 Bcf/d and Canadian imports at 5 Bcf/d.

Meanwhile, average feedgas flows to the nine major US LNG export terminals eased slightly to 17.1 Bcf/d this month from 17.2 Bcf/d in July, although signs of recovering LNG demand are emerging, Trading Economics said. Gelber put Thursday's gas flows at 19.4 Bcf/d.

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