US natural gas prices moved higher in midday trading on Thursday after government data showed a smaller-than-expected weekly storage build, reinforcing expectations of a tightening market balance.
Both the front-month futures contract and the continuous contract gained 1.54% to trade at $2.764 per million British thermal units.
The US Energy Information Administration reported that working gas in underground storage increased by 28 billion cubic feet in the week ended July 24, below analyst expectations for a build of about 37 Bcf.
Total inventories rose to 3,084 Bcf, leaving stocks 32 Bcf below year-ago levels but 185 Bcf above the five-year average of 2,899 Bcf.
Gelber & Associates said the smaller-than-anticipated storage build reinforced the market's recent tightening bias, indicating that steady power demand and strong export demand are absorbing supply more effectively than previously expected.
The firm noted that production eased to 110.4 Bcf per day, while Canadian imports declined to 5.6 Bcf/d, keeping total supply toward the lower end of its recent range.
On the demand side, power burn increased to 48.7 Bcf/d as summer cooling demand strengthened, while LNG feedgas demand remained steady at 18.3 Bcf/d, with no significant facility-level changes reported.
NRG Energy said demand was somewhat softer overall, primarily due to an overnight 1.4 Bcf/d decline in power burn. However, stronger industrial and residential/commercial consumption provided a partial offset, adding about 0.6 Bcf/d.
Looking ahead, Aegis Hedging said weather forecasts were largely unchanged, with significant cooling across the Midwest offset by modest warming trends elsewhere.
Gelber added that cooling degree days are expected to build toward a peak around Aug. 8, with temperatures forecast to run one to two degrees above the 10-year average across much of the six- to 15-day outlook period.