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US Natural Gas Update: Futures Slide Despite Bullish Storage Build, Amid Weak LNG Flows

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US natural gas futures edged lower on Friday despite a smaller-than-expected storage build, as softer demand, weaker LNG feedgas flows and steady production weighed on prices.

Both the front-month futures contract and the continuous contract dropped 0.58% to settle at $2.742 per million British thermal units. US natural gas prices are set to end the week lower by 5.31%, according to Trading Economics.

The US Energy Information Administration released its weekly natural gas storage supplement on Thursday, reporting a net injection of 28 billion cubic feet into storage, for the week ending July 24, down from last week's 32 Bcf, bringing total gas inventories to 3,084 Bcf.

The net injection was significantly below forecasts, at 37 Bcf, and the prior year's 44 Bcf, but was ahead of the five-year average for this period at 26 Bcf, according to data compiled by Investing.com.

This brought total working gas in storage to 3,084 Bcf, which was 32 Bcf, or 1% below the prior year's figure, but 185 Bcf, or 6% above the five-year average for this period.

Meanwhile, US dry gas output saw little change, at 108.8 Bcf/d, up 0.2 Bcf/d since last Friday, according to NRG Energy. At the same time, demand softened amid rising solar generation across key regions.

LNG Feedgas flows remained weak, averaging 16.9 Bcf/d, significantly below the record monthly high of 18.8 Bcf/d in April. This is primarily due to the Freeport LNG facility in Texas entering into planned maintenance in July 10, which is expected to last until late August.

Weather forecasts remained bullish, with above-normal temperatures expected to blanket the whole of the country from August 7th through August 13th, according to the National Weather Service, keeping space cooling demand and gas-fired power burn elevated in the near-term.

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