US natural gas futures edged lower in midday trade on Friday as comfortable storage levels, strong production and limited changes to weather expectations kept pressure on prices despite steady demand from the power sector and improving LNG export demand.
The front-month Henry Hub contract fell 0.93% to trade at $2.880 per million British thermal units, while the continuous contract declined 0.27% to $2.909/MMBtu.
The US Energy Information Administration reported a 32 billion cubic feet increase in natural gas inventories for the latest reporting week, a result that was largely in line with market expectations.
The build was slightly below the analyst forecasts of around a 34 Bcf increase, providing little new direction for traders.
Weather outlook revisions were also limited, with forecasts for the lower 48 states warming by only about 1 degree Fahrenheit over the outlook period.
Warmer conditions across the Rockies were mostly offset by cooler revisions in the eastern regions, leaving the overall demand outlook largely unchanged, Aegis Hedging said.
Natural gas demand from the power sector declined by 1.2 Bcf per day from the previous day to 45.5 Bcf/d, but consumption remained above year-ago levels. Power burn is expected to recover into the low-to-mid 50 Bcf/d range as hotter weather develops in early August, NRG Energy said.
LNG feedgas demand strengthened slightly on Friday morning, nearing 18 Bcf/d, supported by higher nominations at Freeport LNG, which increased to 1.08 Bcf/d.
Forward demand expectations have improved to around 18.7 Bcf/d for the coming week, with additional upside expected from commissioning progress at Golden Pass LNG and Corpus Christi Stage 3.
Those gains, however, are being partially offset by ongoing maintenance activity at Freeport LNG, Aegis Hedging noted.
On the supply side, production remained strong. Trading Economics said output from the Lower 48 states averaged 110.4 Bcf/d so far in July, up from 110 Bcf/d in June.