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US Natural Gas Update: Futures Slide Over 2% on Forecasts of Near-Normal Storage Injection

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US natural gas futures fell sharply on Thursday, as forecasts pointed to another near-normal injection into storage, despite expectations of exceptionally hot temperatures through late August.

The front-month Henry Hub contract and continuous contract were both down 2.18% at $2.743 per million British thermal units.

The market is awaiting the US Energy Information Administration's Weekly Gas Storage Supplement for the week ended August 07. Estimates pointed to a net injection of 31 billion cubic feet of gas into storage, down from 33 Bcf last week and 56 Bcf during the same period last year, according to data compiled by Investing.com.

It was, however, broadly in line with the five-year average for this period, at 33 Bcf, making current consensus estimates bearish for the markets.

Meanwhile, weather forecasts continued to turn bullish, with above-normal temperatures expected to blanket most of the country barring parts of the northeast, from August 20 through August 26, according to the National Weather Service. This is set to keep space cooling demand and gas-fired power burn elevated in the near-term.

Strong domestic output continued to weigh on prices, averaging 108.5 Bcf/d in August, aided by additional pipeline takeaway capacity in the Permian Basin, according to NRG Energy.

At the same time, overall demand dipped 0.2 Bcf/d due to a decrease in power burn and industrial consumption in recent weeks.

LNG export feedgas flows were expected at 17.99 Bcf/d on Thursday, above the 30-day moving average of 17.89 Bcf/d, according to the Bloomberg LNG Feedgas Model.

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